Leasing Versus Buying a Car

Knowing the tricks makes you a better buyer

There are many reasons for you to lease a car versus buy a car, but too often it is the auto dealer’s profit motive that determines which method you use. To help make sure you do not become a victim of this, here are some things to consider.

When to leaseHere is a check-list of things that may sway you toward leasing your next vehicle;

key Lower up-front cash requirement
key You prefer a new car every couple of years
key You do not drive many miles each year
key You are not hard on your vehicle

When to purchase

key You plan to have the car for years
key Low car loan interest rates and payments
key You drive more miles than a lease allows
key A late model used car seems perfect
Leasing Versus Buying A Car

Know the leasing tricks of the trade

If you think leasing a vehicle is an option for you, here are some tips to ensure you are making the best deal.

Action 1 Negotiate first. Negotiate the price before telling the dealer you wish to lease. The purchase price you negotiate should be the price the dealer uses in calculating the lease payments as well as an outright purchase. If it is not, this technique forces the dealer to disclose this fact.
Action 1 What is the APR? Ask the dealer to disclose the effective Annual Percentage Rate (APR) built into the lease. If the dealer gives you a lease factor instead of an interest rate, multiply the lease factor by 24 to get a general interest rate.
Action 1 Turn in value. Ask what the projected turn-in value of the car is at the end of the lease. This value is often overstated by the dealer to artificially lower your lease payment. It can also impact your ability to purchase your vehicle at the end of the lease.
Action 1 Clarify added costs at lease end. Many customers have been surprised with a high mileage surcharge for excess miles and charges for “excessive” wear and tear when the car is returned at the end of the lease.
Action 1 Shop around. Since many of the costs associated with a lease are hidden from view, it is best to shop for the best deal.

Knowing the questions to ask before you shop for a new vehicle can help you make the best objective decision regarding a lease versus buy alternative. It may just help you stay in the driver’s seat during dealer negotiations.