Car Leasing Secrets: An FAQ Summary
The best way to get a good car lease deal is to make sure that you know all the car leasing secrets that there are in the market. Of course, you might not become an instant expert when it comes to shopping around for a good car lease deal. But knowing a few of the facts will definitely help you get the best deal there is for you. Here are a few things that you should know:
What's a car lease deal?
One of the first car leasing secrets to know is that there are two types of car lease deals. These are the closed-end and open-end lease deals. A closed-end lease is one where you can return a car at the end of a lease contract and then simply walk away, meaning that you don't own the car at the end of the contract. This is actually the more popular choice for people who lease vehicles. Open-end lease is actually more for commercial business and can be a little more complicated. The market value of a car is determined with this kind of deal and then the residual vale of the car is pre-determined. This means that a person who goes for this deal will pay the difference which can be quite pricey.
How is a lease calculated?
You might be wondering if there is some kind of difficult formula that the dealers use when they calculate your monthlies. The car leasing secrets truth is that it's as simple as your ABC's. You just need to know all the figures that you need for a simple equation. First, get the depreciation value of a car by subtracting the residual value from the cap cost. You divide the difference by the number of months you plan to lease a car. Then for the monthly finance charge, add the residual value and the cap cost and then multiply that by the money factor that can be given to you by your dealer if you ask politely. The result is the monthly finance charge. Add the monthly depreciation and the monthly finance charge that that is your monthly car payment. This may vary across different vehicles.
What are the Advantages?
Two advantages to think about are lower monthly payments compared to a purchase. These payments can be up to 60% less than if you purchased a car on monthly terms. This means that you can drive a much nicer car if you lease it. Upfront costs are also lower, with some down payments starting at zero, depending on the car. Paying a larger down, however, does not always mean that this will lower your monthlies.
What are the Disadvantages?
The car leasing secrets that most dealers will not tell you about usually involve many different fees. This includes early termination fees if you want out of a contract before it ends; insurance costs that will require you to pay more than you are used to paying for insurance; car mileage fees since leases will only allow you a certain annual mileage limit; and so-called "wear and tear" fees that are used to fix up any damages done to the car during the lease. These fees can run up to a hefty price if you are not careful.
These are the basic car leasing secrets that you should know about before you get yourself into a lease contract. Understand them well and you should have no trouble with a lease at all. Depending on your preferences, you can get the best car lease deal with a little knowledge and negotiation.