Your next vehicle purchase may not be an outright sale but rather a lease. With all of the difficulty in the worldwide and domestic American financial markets. Many lenders, financial institutions and banks are now looking to leasing as an easier way of car sales, motorists new or newer vehicles and the financial institutions having a greater measure of security and safety.
Leasing usually involves new cars, but not always. In the case of older vehicles leasing can make even more financial sense to the automotive purchaser. It should be noted and even emphasized that lease payments are based mainly upon anticipated depreciation. New vehicles or any vehicle takes its biggest “hit” by far in its initial “new car” time period. After all it comes down to common sense that when a new car purchaser drives his purchase off the car dealer lot that someone has to “pay” for the costs of the dealership , its employees , its electrical and heating utility costs and of course the commissions of the salesperson.
As a matter of contrast used car depreciation is much slower and more gradual.
The big “hit” so to speak has been taken before it’s your turn. As a result, used vehicles can be seen to be among the most attractive leasing bargains on the automotive market.
On top of that with so many cars that are always on stream, coming off of newer leases there is usually no shortage of stock to pick from.
If you are new to the concepts and advantages of automotive leasing be reassured. Leases are more complex than standard, “old fashioned “car payments but it hardly a case of rocket science or brain surgery.
First of all ask about the annual percentage rate which may be referred to as the “APR”. The APR is Annual Percentage Rate, which is the full annual cost of a loan, including all administrative and service charges & fees. You have the right as a purchaser or signer of the lease the all important APR. If the salesperson is evasive or even refuses to divulge this information remember that you are entitled to this information.
Without the APR and especially without knowing what the maximum (or cap) can be how on earth can you or the leasing agents determine what your costs will be. Next in step if you do not know what the cap are you will not be in a position to determine at what point and at what costs early termination penalties will be. These are important determinants and policies should you wish to terminate the lease early for what ever reasons you have as an automobile lessee.
One last point in the leasing process is to ask for what is referred to as “gap protection”. More than one proud and happy driver of a leased vehicle has had the misfortune of being involved in an vehicular accident , which while not even their fault left them with a vehicle that was written off. In these cases, where the car is written off by the auto insurance provider and a settlement given, the lease company may well treat this situation as an early termination of the lease. What this means to you in real life terms you may have to pay a substantial penalty to the leasing company, out of your own pocket, for “early termination ‘of your vehicle lease. In your lease negotiation phase it is best to ask for ‘gap protection”. Often leasing companies will throw this in as part of the deal or at the worst only charge you a minor fee.
All in all you may well find that your next automotive purchase may be a leased vehicle.