Archive for 2009
When you’ve arrived at this blog, you are basically here to know the knick-knacks of car leasing. In this post, we have given out quick and the utmost basic tips to help you get a bargain in car leasing.
Know how much is your mileage requirement. Most leases limit the MPY or miles per year, which is done by imposing up to 20 cents per extra mile that is over 15K miles annually. If you are a driver who places 40K MPY on your vehicle, then you are surely to face thousands of dollars in dues and penalties at the termination of lease. You have to be wise enough to know that it is best to negotiate for a much higher limit on mileage.
Indeed, when it comes to leases, proper negotiation is one of the most important car leasing tips. Another tip is for you to pad up excess miles at the start of your auto lease in order to prevent tax rates for the excessive miles.
Another very important car leasing tip that can give you an added advantage over your dealer is to include GAP coverage. You definitely have to make sure that the GAP coverage is included in the lease. Such is a very important protection for you as it covers you in cases when your vehicle gets into an accident and is wrecked. You can also benefit from the coverage if in case your car gets stolen.
In this trying times, leasing used cars is definitely an attractive option for many people. Imagine driving a used luxury car or even a SUV for much lower monthly payments when compared to leasing a brand new car. However as attractive as all these sounds, getting a good deal when it comes to used car leasing isn’t always that easy, research is the key to land on a great bargain.
Just like new car leasing, you also have to focus on the price as well as the initial market and estimated residual values of the second hand car. This is certainly a difficult task to estimate as there is no set price on used vehicles. In the case of residual percentages, it is pegged to the retail value that is current in the market.
What you have to do is take advantage various sources in order to arrive at the approximate value of the used car using different sources to get a rough concept of the value of the used car. Such source can be the local dealer, the online tools for car evaluation, just to name a few. You can also try getting an estimate by comparing the lease on your vehicle to that of a brand new one. When visiting the dealer, always bring a family mechinic when choosing the car, at least you can thoroughly inspect the condition of the car.
This will certainly provide you with a good view of the difference between brand new auto and used car leasing. Used car leasing is better over new car leasing when the residual value has little depreciation. You likewise have a good chance of getting a bargain on luxury cars that have higher values as used vehicles.
Below are the top three scams most frequently used by auto dealers. Any one of these could cost you a lot of money so before signing that car lease, always read the print.
Car Lease Scam 1: The dealer offers to take your current car as a trade in, pay off your loan balance on that vehicle (no matter how much it is) and lease you a better car than the one you have for lower payments.
Although the dealer will pay off your old loan as agreed, he will then credit the value of the trade-in against the price of the new car then add on the rest of the loan balance you owed to the price of the new car you’re about to lease. The payments won’t change for the reason that you’re leasing and not buying, so the amount will look lower than what you’d have expected, nevertheless the deal is far worse.
Car Lease Scam 2: The dealer offers to pay your remaining lease payments on your existing car lease in exchange for a new lease from them.
Don’t ever assume that the car dealer is taking over the responsibility of car lease payments. What they’re really doing is just taking over the rest of the payments and when completed, will return the car to the company that originally leased it to you. Depending on the terms of your lease, if there’s any problem with the car, such as excess mileage, scratches and among others, the leasing company won’t send the bill to the dealer; they’ll send it to you. Additionally, if the dealer doesn’t pay the remaining payments, or doesn’t return the car, the leasing company will come after you, not the dealer. Lastly, the dealer won’t really be making those payments anyway, since they have found a way of adding the price of the remaining payments back into the total price of your new car.
Car Lease Scam 3: The dealer will try to convince you that all leased cars must have extended warranties, maintenance contracts, paint protection, rust proofing and window etching.
This is a sham. If the dealer press that you should have these extra warranties ans such, don’t give-in. Car leasing companies don’t insist on any of these things. All the items listed above give dealers higher profits and are unnecessary.As appealing as car lease takeover sounds, there are still some risks that a lessee should take note of. One, is the chance of service problems. A study said that a 3-year old car has more than twice the problems as a one-year-old car has. Any repairs that’s not covered by the warranty, comes out of one’s own pocket, even if the car has been in your hands for three months or so. It’s probably a good idea to purchase a comprehensive, bumper-to-bumper warranty to cover the full car lease term.
Another risk associated with car leasing is that it’s difficult to predict what that car (the leased vehicle you’re about to take over) will be worth when it’s, let’s say, five years old. The retained value of the car after 5 years is an important factor in determining your monthly payments. If the retained value is set too low, your monthly payments will be higher however if it is set too high, it gives the dealer the latitude to push up the car’s initial price while offering what seem to be an acceptable monthly payment.
The best vehicles to lease, therefore, are those that hold their value supremely well – such luxury cars, sports cars, and some high-end SUVs. As a result, used-car leasing has become largely the district of a handful of luxury makes such as BMW, Lexus, and Mercedes-Benz.
Just like car loans, car lease requires a lessee to have a better credit rating since the lease provider is exposed to a much higher risk as opposed to car loans. People with a bad credit history will frequently have frustrating experiences when closing the car lease deal, especially when times of credit is tight and the economy is stressed. Although some companies are desperate enough for business that they don’t mind the extra risk, generally, people with sub prime credit should expect to pay higher interest rates, be required to make higher down payments or make a security deposit.
If you expect to use the car for a relatively short period of time, let’s say for 12 months, you can opt to try Car Lease Takeover instead. Although the car lease company has to approve and check your credit history, the requirements are not as strict if you compare it to a new lease. Typically car lease takeovers offer a cash incentive with no down payment to make the deal attractive.
Should you get disapproved, here are a few of your options:- Get a co-signor for your car lease, someone who will be responsible if you make a default on your payments
- Borrow money or a car from family and friends
- Save cash for your “starter car” and trade it in once you have the money or credit rating to grant you that car lease
So you have decided to lease your car or may already have a leased car. You made sure you purchased the correct car lease insurance and your leasing insurance covers everything right? Unfortunately not.
What is Gap Insurance?Gap insurance covers the gap between what you owe on a car and what it’s worth if you happened to total your car in a covered losses such as accident or theft. The types of losses covered and the extent of the coverage may vary according to the insurance company, so make sure that you clarify what’s covered before availing the gap insurance.
Gap Insurance Needed for a Leased CarFor car leasing, gap insurance is a must, especially for the no-down payment leased cars. As much as the car lease insurance is important this, however, does not cover a major gap that is in every leased vehicle. The necessity of the gap can occur is you totaled your leased car in an accident. How it works? Read further below.
How Gap Insurance Works for a Leased CarYour leasing insurance will cover the depreciated market value at the time of the collision. Usually, the car lease payments are lower when compared to buying one. Since all new cars depreciate the most in first few years, the market value of the leased vehicle is lower between what is still owed on the car lease contract. But, you are still responsible for that difference in what the insurance company will pay and what is still owed on the lease… that amount or “gap” is what gap insurance covers.
Some things to take note of:- Carry your car lease insurance company’s comprehensive and collision coverage in order for the gap insurance to pay out.
- Check to see if your car lease down payment is covered in the gap insurance.
- Be aware of what your deductibles are on your car lease insurance, since gap insurance does not cover your car lease insurance deductible.
- Even if you car lease has already begun, you can still get a gap insurance
- Remember that gap insurance is only applicable if you have religiously conformed to the terms stated in car lease contract.
- Take note that until the gap insurance pays for you for the loss, you may have to continue making car lease payments.
- Gap insurance and wear and tear insurance are two different things
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