Here is a great article on leaseing from AutoTrends Magazine on line Submitted by Matt Keegan on May 5, 2011
Car shoppers have three choices when they buy a new car. They can pay cash, take out an auto loan or arrange leasing.
Paying cash is the way to go if you have the funds, but few of us have $25,000 or more available to make a purchase. Most buyers opt for new car financing, putting down between 5 and 20 percent or using their current car as a down payment.
Negotiate carefully when arranging car leasing.
Increasingly, new car leasing is being considered by shoppers who prefer to “rent” a car for two or three years and turn it back in for a new car. Under this arrangement the car “owner” has no financial stake in the vehicle. Instead, lessees make monthly payments and stay within the alloted miles to avoid extra charges.
Car leasing isn’t for everyone, but it does allow drivers to get behind the wheel of car that they might not be able to afford. For example, as of this publication, a Cadillac CTS can be leased for $399 per month with no money down. That amount may be lower than what buyers would pay monthly for a new car loan and it also helps lessees avoid a down payment. The person who might choose this car could be a Buick LaCrosse who shopper who realizes that she can upgrade to a Cadillac without busting her budget.
What is the best way to lease a car? By following certain steps as outlined:
1. Choose a car – Narrow your car buying list to the particular make/model vehicle you want to drive. This allows you to focus on one vehicle without the distraction of comparing different cars.
2. Take a test drive — Be certain that you’re happy with the vehicle you plan to keep for the duration of your lease term. This is important because leases generally run from 24 to 39 months. You don’t want to be stuck with a vehicle you don’t like. The cost of breaking a lease is prohibitive.
3. Know your amenities — Various trim levels are available, therefore make certain that the car you lease is equipped with the amenities you want. A navigation system may not be available on the base model and certain desired safety features such as a rear view camera may not be available at all. Verify that everything you want in a car is included — generally, you can’t add these items later when dealing with a leased vehicle.
4. Review lease deals – Not every vehicle offers a great lease deal and leasing offers change all of the time. Consider lease term, the amount of money you’ll be expected to put down, your annual mileage allowance, monthly payments and other expenses including taxes.
5. Make a deal — Negotiate the best price on the car before arranging your leasing. Your monthly payments will be based upon the cost of your car as negotiated by you. Settle for whatever the dealer offers and you’ll pay more than you need to.
6. Review your contract – Most leases are closed-end contracts which means you turn in your vehicle at end of lease term and that is that. Open-end contracts, though not common, require you to make a final “balloon payment” to pay the difference between the residual and fair market value of this asset. Avoid this type of contract — if you absolutely love the car, you can still buy it with a closed-end lease.
Once you know what vehicle you want and before you begin your negotiations with your dealer, contact your auto insurer to find out what your insurance costs will be. This is important because you may find that the leased car will sock it to your insurance coverage, hitting you with an unforeseen expense that might wreck your budget.
