Archive for November, 2011
Welcome to part 4 of the series on how to lease like a pro. Remember that smart leasing does not only begin with choosing the right car as you will also need to take into account a variety of factors such as the residual value and the cap cost reduction of the car.
We will now talk about the lease term and how this alone will affect the price of the lease.
How the Lease Term Affects Car Leasing Prices
Similar to buying a car and entering a financing scheme, the term of the lease will play a big factor in determining how much you need to pay.
Look at it this way: choosing a longer lease term may seem to be more practical upon first glance as you will effectively get lower monthly payments but a closer look will reveal more about the importance of choosing the right lease term.
Remember that you are paying less in terms of monthly rates but you are also paying the said amount for a longer time. For example, if the lease price of the car is $230 for a lease term of 36 months then this will equal to $8,280. If the car is being offered for $199 for a 48-month lease term then you would have paid $9,552 after the lease term expires.
The savings will eventually add up. The good news is that car dealers will most likely offer attractive leasing deals over an average lease term. Stay on the safe side of things and avoid choosing a car lease that is more than two to three years, or around 24 to 36 months. Anything longer than that will expose you to the risk of paying more for your car.
Another thing to remember is that a longer lease term will also result in a higher interest rate. This is due to the fact that lenders and car dealers will have to deal with an extended risk period as well.
Intelligent car leasing starts here. Find all the latest car leasing deals before making a decision in order to find the best car lease for the money.
This is part 3 of the series on how to lease like a pro. If you want a brand new car without paying too much cash upfront then you should definitely consider leasing instead of buying a car.
However, it is true what they say that leasing is not for everyone. If you take the chance to study the lease agreement and compute the actual monthly payments, you will no doubt end up with an affordable car lease–while driving the car that you truly like!
How the Down Payment or Capitalized Cost Reduction Affects the Price of the Car Lease
First of all, it is best to AVOID zero-down lease offers altogether.
Why? Not because we are trying to rob you of the chance to save money but zero-down lease deals will actually make you spend more over the duration of the lease.
Car dealers will offer no-down or zero-down leases mainly to attract a wider customer base. The adverts do sound enticing–imagine paying nothing at the beginning of the lease term. This is ideal for the cash-strapped buyer!
The Bad News on Zero-Down Lease Deals
We will give it to you straight. The bad news about zero-down car leases is that it will definitely result in higher monthly payments and higher interest rates.
Remember also that you WILL still need to fork over some cash at the beginning of the lease term. You will still have to pay for taxes and licensing fees along with other expenses and fees incurred to facilitate the car lease.
Benefits of Making an Adequate Down Payment
The cap cost reduction or down payment is termed specifically to help reduce the amount of the capitalized cost. The capitalized cost is the selling price of the car and will be amortized over the length of the lease term.
Do you have a low or bad credit rating? Simply offering a higher cap cost reduction will somehow lessen the sting of the higher interest rate–not to mention serve as a gesture of goodwill to the car dealer, bank, or lender.
If you managed to significantly reduce the capitalized cost then are on your way in enjoying low monthly payments on your car lease. This means that you are saving money each and every time that you drive the car.
If you are planning to lease a car then you should begin saving money for the down payment TODAY.
More to come on how to lease like a pro.
Smart leasing has nothing to do with race, color or creed–in fact, anyone can learn the different tips on how to lease like a pro! Car leasing secrets will not only help you get the best car for the best lease price but will allow you to pocket magnificent savings as well!
How the Residual Value Affects the Price of Your Car Lease
The residual value or estimated depreciable value is exactly what it sounds like: an estimate. No one will know for sure on how much a car will be worth in the future but you have to accept the fact that this value alone might spell the difference between a good and a bad car lease.
If the car that you are choosing to lease is well-known for having the build quality of a wooden shanty then be aware! The deal might sound too good to be true. Remember, a cheap car lease does not necessarily mean that you need to drive a cheap car. It is all about value for money!
Car brands that are desirable in terms of performance, quality and design will most likely have a pretty solid residual value. The same can be said for cars that have a history of providing unparalleled performance.
However, as the car gets more expensive then the same can be said for the lease price. It is all a matter of choosing the right car with the right trim model. Car dealers will most likely offer high-end trim models for their car leases–it is up to you to decide on how much of a car do you really need.
For example, did you know that leasing the Honda CR-V is $40 more expensive than the Honda Civic? It is also approximately $20 more compared to leasing the Honda Accord. Think the difference is insignificant? Multiply the said differences to the 36-month average lease term.
This means that leasing the CR-V based on monthly payments alone will cost you an average of $7,884. Leasing the Civic will cost you $6,444 on average while the Accord will cost you $7,164.
Think about that for a second. The reason why Honda cars were chosen as an example above is due to the fact that Honda cars are among those that have the highest residual values in the market. Do you really need the added weight of the CR-V if all you need is a compact Civic? Remember that since the CR-V is bigger and has a larger power plant, it will also be a tad more expensive to maintain. The savings will multiply tenfold!
If you want to lease a car without spending all your cash then choose a car with a pretty decent residual value and performance history.If you want to find the best leasing deals without breaking a sweat then start your car shopping here.
People are now looking forward to their next car lease especially when buying a new car is not an option. New car prices are as stable as balancing a big rock on a thin piece of wood and this alone has made leasing a more viable and economical option for the cash-strapped consumer.
Smart leasing will comprise a lot of factors, namely:
1. The purchase price of the car.
2. The estimated depreciable value of the car, otherwise known as the residual value.
3. The amount of down payment that you are willing to make, more popularly known as the cap cost reduction.
4. The term or duration of the lease; and
5. The money factor involved or simply the interest rate.
If you managed to negotiate all the above mentioned factors in a new car lease then you can expect the cheapest and lowest monthly rates in the market. However, if you overlook even just one from the list (the residual value of the car, for example) then this will critically affect the price of the lease.
How the Purchase Price Affects Leasing Rates
Smart leasing will all begin on the type of car that you choose. It is indeed possible to lease the car of your dreams but you have to be realistic in terms of your expectations. If you choose a car that is more expensive or considerably more premium compared to an equivalent model then you would not expect to get the lowest monthly rates now, don’t you?
The purchase price is also called the capitalized cost. To make things more simple and clear, the Cadillac Escalade (and all of its awesome V8 power and refinement) will be more costly to buy than a Honda Accord or Toyota Camry. This naturally means that the Cadillac Escalade will have a higher lease price compared to the humble Accord or Camry. However, this does not mean that you cannot lease an Escalade while saving money as there is more to new car leasing than the capitalized cost itself.
More to come on how to lease like a pro. In the meantime, check out the latest lease prices on all types of cars and SUV’s in order to get an idea on what you can actually afford.