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FutureStarrA Lease Payment on 50000 Car
The car industry was the focus of a recent high-profile fraud. In reality, leasing is often looked upon as a low-risk way of acquiring a car. The payment for a car could get as low as one third of the purchase price of the vehicle over the lease period. However, more fraudsters are turning to the leasing industry to deceive consumers into purchasing highly inflated cars. The finance service companies, auto dealers, and lease companies are warning people about the fraudulent practices.
If you are in the market for a new car, I’m sure leasing has emerged as one of the viable options. But, leasing a car may or may not be the right choice for you, so let’s take a look at some of the basic concepts, to better understand the whole process. What better way than by looking at an actual lease agreement. This was provided by a kind soul who felt unprepared when leasing his vehicle, and he wanted to enlighten those who were considering taking the same step. Below, I will address some of the leasing terms that may be Greek to you.First of all, leasing is similar to renting… at the end of the agreed term, you own nothing. At that point you will need to find another vehicle. If you really loved your leased vehicle, you have the option to buy it at the agreed residual value, which is the value of the car at the end of the lease.A fee may be charged to buy the vehicle. If you decide not to buy, you can turn it in and walk away, provided your car is in pristine condition. If you have any nicks or damages, you will pay extra for excess wear and tear. You may want to cover this topic with the dealer before signing on the dotted line. Your idea of excess wear and tear may be different than his. It’s also very important to maintain the engine as indicated in the manual. You are responsible for maintenance. In the fine print you can see that there is also another fee for excess mileage. This example states a 10,000 mile limit, but many leases have a 12,000 to 15,000 mile per year limit. The charge for going over the limit is anywhere from 10 to 25 cents per mile. Contracts which are ended early also come with an early termination fee which makes it more expensive for leasees to return vehicles before their term is up. Also, if you decide not to buy the car at the end of the lease, you will be charged a disposition fee. Oh, and don’t forget that there will also be acquisition fees, registration fees, doc fees and possibly a tire fee.
Lower monthly payments are usually the reason most people are lured to car leases. That is what the dealers want you to focus on. But low monthly payments are only part of the picture. When you are buying a car, the most important number is the negotiated price. Leasing is no different. Sites like NADA Guides and kbb.com can help you find the fair purchase price of the car you are considering. Capitalized cost is the agreed purchase price plus some taxes and fees. Capitalized cost reductions are trade-ins, down payments and rebates that reduce the total capitalized cost.If you are someone who likes a new car every couple years and have no problem with continual monthly payments, a lease may work well for you. Or, if you can write off the cost of a lease as a business expense, a lease may also work for you. But if you are someone who looks forward to one day driving a car knowing it’s free and clear of any payments, then leasing is not for you. With today’s technology, cars are more reliable and last longer than ever. Even with a regular 5 year car loan it’s not impossible to drive that same car debt free for another 5 years. Leasing does not give you this freedom. (Source: www.mortgagecalculator.org)