Car leasing may sound clear-cut however there are details that lessees should pay attention to. Below is a quick checklist when opting to lease your next car.

1. Shop around. For every dealer and manufacturer is a different car lease rate that can be negotiated to fit accommodate your needs.
2. Always read the fine print. Make sure to orient yourself ahead of time about all the hidden charges associated with your car lease, i.e, security deposit, registration fees, and lease-end services fees. A “Special” deal won’t be as special if from the low monthly payment of $199, you’d be paying twice the amount for the “partially declared” charges.
3. Lay down a closed-end lease. If at the end of the lease, the value of the car is less than the residual value, the lessor will owe the lessee the difference. However if the actual value is more, then the lessee has the option to buy the car for the fixed residual value or pay the lessor the difference instead.
4. Canvas for insurance rates for the kind of coverage required by the lessor. The car lease agreement may require higher liability limits and lower deductibles than you currently carry, and both will increase your insurance premium.
5. Choose cars to lease that tend to hold their value well. The sexiest cars are not always the best buys in the world of leasing.
6. Negotiate the price of the vehicle before moving to car lease negotiation. Before discussing the car lease details, make sure to have set the car’s selling price first hand. Doing so will prevent the vehicle’s selling price from influencing the lease negotiation.
7. Increase the mileage limit before you enter into the lease, if you feel that you’ll surely exceed it. Buying an additional mileage over the term of the lease is less expensive than paying for the excess at the end.
8. To avoid lease-end wear and tear charges, maintain the car well during the lease period. Make sure to regularly have the leased car tuned-up. Lessors will not think twice in charging the lessee for perceived poor treatment.
9. Remember that if a lessee decides to purchase the vehicle at the end of the lease, in the long run car leasing may end up being more expensive than a loan.

Often when leasing is explained, most would say that renting and leasing are analogous. However it is not true; leasing and renting are two different things; here’s why.

Car rental basically answers only short term or temporary auto needs such people who are currently in a business trip or those who are  in a holiday vacation.

Cars for rent are wholly owned by the rental company. The auto rental company, handles the maintenance and repair, and also carries the basic insurance. Customers, in turn, agree not to damage the car, to buy the gas, to purchase an additional insurance if necessary, and to return the car within the agreed time.

Car rental rates can vary widely since this can be based on a daily or weekly fee which can have an unlimited mileage or not (additional mileage is an additional cost).   Same cars are rented over and over again unlike car leasing wherein the car needs to be disposed.

Unlike car renting, car leasing is actually another form of financing. A car leasing company only gets involved once the customer decides that he wants to finance his next car via leasing. The car leasing company then buys the car from the car dealer at the price agreed (with the client) and then loans it back to the customer which in this case is the car.

Since the lease company has invested money in the vehicle, due interests will be paid by the lessee.  The leasing company also expects to be paid for the residual value of the car as the lessee makes use of it. When the lease ends, vehicles are returned to the company although the lessee has a purchase option at the end of the term.

• Leasing is a form of financing and renting is not.
• Lease terms begin at 24 months while renting can be a day or two.
• A customer’s credit report is important in order to acquire a lease while in renting it isn’t.
• Leasing appears on your credit report just like a loan and renting doesn’t. If there are any default in payments, this will appear in your credit score.
• In rental, your choice of vehicles is only available from the auto selection of the rent-a-car companies, while in leasing you can pick the car your heart desires.
• Ending the rental early is fairly easy by just returning the car. Ending a car lease, on the other hand can be pricey since there are several fees that a lessee must settle.
• Renting can come out more expensive than car leasing if the length of time is the same

Often individuals turn to car leasing because of the assumed low-monthly payments. However, when you look at the various stages of car leasing, there are more “car leasing related fees” that actually meets the eye.

At the very start of the lease, the lessee will have to pay a refundable security deposit which is typically equivalent to one monthly payment. The security deposit is paid as such to safeguard the car leasing company against non-payment and any incidental damage done to the car after the end of the lease. The lessee is also required to pay the acquisition fee, otherwise known as bank fee, this is an administrative fee charged by the car leasing company. This fee is not, usually, specified explicitly in the car lease contract but this is included in the Cap Cost when calculating for the monthly payments – so make sure to ask about it if you don’t see this mentioned.  There are other fees as well, such as fees for licenses, registration, title and any state or local taxes.

During the car lease, as a lessee, you are expected to honor your monthly dues; failure to do so will result in another fee in a form of late-payment charges. There are also financial obligations in the form of traffic tickets, emission and safety inspections and the ongoing maintenance costs. When the lessee at the mid-term of the lease feels he can’t deal it anymore and just wants to end the lease before the agreed term, he will then be charged with a “substantial” amount for early termination.

At the end of the lease, if you exceed the allowable mileage, expect to pay the “excess mileage charge” which can cost right about 10 to 20 a mile.  Incidental damages done to the car, and deemed to be beyond what’s identified as normal, will result in “excess tear-and-wear charges”. Finally, if you choose not to purchase the vehicle, then you have to pay a disposition fee.

In car leasing, a high mileage is definitely an issue especially during the end of the lease term. Often in car leasing, the lessee is only allowed a maximum of 12,000 annual mileage which is why its always important that the lessee ask himself beforehand if he needs to be running a high mileage. Car mileage will always cost you regardless of whether via leasing, buying or renting. Wear and tear aside, the rising cost of fuel and the continuing onslaught of environmental levies should encourage any driver to keep his mileage down.

However a high mileage user should not totally put off leasing completely because of the mileage restrictions. There are ways on how to maneuver a high mileage car leasing and this article will offer some tips.

1. Pulling some strings at the lease deal – If a car lessee intends to purchase the car at the end of the term, he can cunningly take out a low mileage car lease contract without worrying about the excess mileage charges accrued over the lease period. This way, the lessee can maximize his car usage while still paying monthly rentals over the period of the lease agreement.
2. Drive a Diesel – Diesels have vastly improved; now they are cleaner, quieter, and quicker. More importantly, diesel engines can give any driver a 30-40% more mileage than petrol cars. Diesels is really a great money-saver particularly for many short-run trips since the superior torque of diesels entails less gear changing. The price of diesels are about 30% cheaper than unleaded petrol which is certain to lessen the gas expenses. Just look beyond the lack in horsepower, higher initial cost and loud engine start during cold winter mornings; a diesel-engined car certainly suits a high mileage driver.
3. Lower Residual means lower purchase price – The main reason why in car leasing high mileage is such an issue is that it can inflict a bigger depreciation which in turn lowers the resale value of the car. There is an offset effect of low resale value  and that is a low purchase price. A favorable purchase price for the car can have such a positive effect on the deal that even high mileage drivers will benefit.
4. Turning it in Early – If at the mid of the car lease period, the lessee feels that he will certainly exceed his allowable mileage and doesn’t want to face the extra charges, he can always end the car lease term earlier or he can find someone to assume the lease for him (someone who is looking for a short-term car lease options). There are a lot of car dealers who specializes in car leasing assumptions.

About 20% of new-car transactions are leases, as interest rates rose, car manufacturer’s shifted incentives from rebates and low-interest financing to leases. However, often car leasing gets criticized and it’s understandable since “car leasing” has enough jargon that can practically confuse anyone who don’t have a slightest history in finance. Plus dealers in the past have slipped bad deals with confused car buyers who simply wants low monthly payments.

To fully dissect what car leasing is, this article will discuss the common myths associated with car leasing that most people have fret over the past.

1. Buying is cheaper than leasing. Buying a new car has it’s advantages while opting to lease the car has its own set of vantage points. To buy a car or to lease a car depends primarily on the driver’s needs. There are at some point wherein buying can be a better option such as when the driver needs to drive more than the allotted 12,000 miles a year (in leasing – the gas mileage is limited).However if you loaned a car and then planned to trade it in before all of the loan is paid off, the value of the trade-in will unlikely cover the remaining balance of the loan.

   To help you decide, its good to lease when you’ll use the car for 2 to 3 years and annually consume less than 12,000 miles. However if you plan to keep the car longer than 3 years and know that you’d be consuming more gas mileage then buying can be the best thing.

2. It’s nearly impossible to negotiate a lease. As a matter of fact, leases are negotiable. But first you need a tour of the jargon so that you’d better understand the basics of negotiating a lease:

   Capitalized cost is basically the price of vehicle. You should haggle over this just as hard as you would if you were buying it.

   Money factor is also called lease factor or even a lease fee, this is the interest rate you are being charged. It is expressed as a multiplier that can be used to calculate your monthly payments. For example, 7.2% interest, when expressed as a money factor, is 0.0030. To convert a money factor to an interest rate, multiply it by 2,400. To convert an interest rate to a money factor, divide by 2,400. (Always use 2,400 regardless of the length of the loan.)

   The lower the number, the better. Car dealers are sometimes reluctant to share the money factor, so be persistent.

   Residual value. Finally, the residual value is the value of the vehicle at the end of the term. The higher the residual, the lower your monthly payments however it can manacle you.

    A more realistic residual value will make it easier to sell the lease, trade your vehicle mid lease or buy the vehicle at the end of the lease.

   Ask the dealer to show you several deals from various banks, focusing on the money factor and the residual value of the car lease.

3. Only businesses get a tax break. Tax laws allow businesses to deduct the monthly payments as an expense however individuals who used their leased car for business can deduct percentages of their lease payments, repair and insurance costs from their income taxes as well.
4. Turning in the leased car can dent a man’s wallet. In car leasing, once the driver exceeds the allotted gas mileage, he is charged a penalty fee for the excess around 18 to 21 cents per mile. However if you opt to buy a car, the car owner is also penalized for higher-than-average mileage when trading it in.

   To prevent from exceeding the allowed mileage, you can probably negotiate a higher limit in exchange for a higher monthly payment and still save money.

6. If you want out early, you’re stuck.You can actually terminate your car lease at an earlier date if you wish by transferring your existing car lease  to someone who can take it off your hands. There are a lot of websites online that match people who wants to get out of their lease early with those individuals seeking for short term car leases.

So you see leasing is not at all bad as others would purport it to be. If you, as a lessee, know what you want and negotiate smartly, car leasing can be a great deal.