Loans > Buying vs. Leasing a Car |
Know your rights and responsibilities when leasing a car You have the right to: (1) use it for an agreed-upon number of months and miles; (2) turn it in at lease end, pay any end-of-lease fees and charges and walk away; (3) buy the vehicle if you have a purchase option; (4) take advantage of any warranties, recalls, or other services that apply to the vehicle. You may be responsible for (1) excess mileage charges when you return the vehicle specified in your car lease agreement; (2) excess wear charges when you return the vehicle such as for body damage or worn tires; (3) substantial payments if you end the car lease early, and usually the earlier you end the lease, the greater these charges will be. Credit Kit -- Improve your credit rating and reduce monthly bills $200+ Debt Kit -- Settle unsecured debts for less than half of amount owed |
Almost all financial advisors advise you not to lease a new vehicle because it isn't a good deal, but if you are interested in this option anyway, please learn more about it before taking the plunge. The Federal Consumer Leasing Act gives you the right to information that helps you understand and negotiate your new car lease. A number of car leasing options are available. Look for the car lease that best fills your needs, your budget, and your driving patterns and remember to read the car lease agreement very carefully before signing it. When you lease a vehicle, you may purchase the vehicle at lease end if you have a purchase option, or return the vehicle at lease end, pay any end-of-lease costs, and "walk away." The following are important considerations when leasing a new car: Consider beginning, middle, and end-of-lease costs: At the beginning of the car lease, you may have to pay your first monthly payment; a refundable security deposit or your last monthly payment; other fees for licenses, registration, and title; a capitalized cost reduction (like a down payment); an acquisition fee (also called a processing or assignment fee); freight or destination charges; and state or local taxes. During the car lease, you will have to pay your monthly payment; any additional taxes not included in the payment such as sales, use, and personal property taxes; insurance premiums; ongoing maintenance costs; and any fees for late payment. You will also have to pay for safety and emissions inspections and any traffic tickets. If you end your car lease early, you may have to pay substantial early termination charges. At the end of the car lease, if you don't buy the vehicle, you may have to pay a disposition fee and charges for excess miles and excess wear, depending upon the terms of your lease agreement. You can compare different car lease offers and negotiate some terms -- The agreed-upon value of the vehicle: a lower vehicle value can reduce your monthly payment -- Upfront payments, including the capitalized cost reduction -- The length of the car lease -- The monthly car lease payment -- Any end-of-lease fees and charges -- The mileage allowed and per-mile charges for excess miles -- The option to purchase either at lease end or earlier -- Whether your lease includes "gap" coverage, which protects you if the vehicle is stolen or totaled in an accident -- Make sure your FICO credit score is at least 750 before trying to obtain a car lease. |
Know your rights and responsibilities when leasing a car You have the right to: (1) use it for an agreed-upon number of months and miles; (2) turn it in at lease end, pay any end-of-lease fees and charges and walk away; (3) buy the vehicle if you have a purchase option; (4) take advantage of any warranties, recalls, or other services that apply to the vehicle. You may be responsible for (1) excess mileage charges when you return the vehicle specified in your car lease agreement; (2) excess wear charges when you return the vehicle such as for body damage or worn tires; (3) substantial payments if you end the car lease early, and usually the earlier you end the lease, the greater these charges will be. Credit Kit -- Improve your credit rating and reduce monthly bills $200+ Debt Kit -- Settle unsecured debts for less than half of amount owed |
Auto Loans: Should You Lease or Buy Your Next Car? |
Loans > Buying vs. Leasing a Car |
