|
|
Look
Before You Lease
To lease or to buy? That's the choice you
face when mulling over makes and models and deciding which car
deal best meets your needs. Leasing a car is not the same as
buying one. When you buy, you own the car. When you lease, you
pay to drive someone else's vehicle. Leasing can involve lower
monthly payments than a loan. However, at lease end, you will
have no ownership or equity in the car. Many dealers and other
lessors offer vehicle leases. Before you decide whether to lease
or buy, the Federal Trade Commission (FTC) reminds you: don't be
dazzled by so-called deals. Ask questions, nail down the
details, read the fine print, and shop around.
If you're thinking of leasing, the FTC
offers these shopping tips:
1. Shop as if you're buying a car.
Negotiate all the lease terms, including the price of the
vehicle. Lowering the lease price will help reduce your
monthly payments. Get all the terms in writing.
2. Learn the language of leasing:
- In a closed-end lease, you return the car
at the end of the lease and "walk away," but you're
still usually responsible for certain end-of-lease
charges, such as excess mileage, wear and tear, and
disposition.
- In an open-end lease, you pay the
difference between the value stated in your contract and
the lessor's appraised value at the end of the lease.
- Lease inception fees are payments you must
make when the lease starts, and may include a down
payment, security deposit, acquisition fee, first
month's payment, taxes and title fees. Ask for a list of
all charges due at lease inception. You may be able to
negotiate some or all of the terms.
- The capitalized cost is the price of the
car for leasing purposes plus taxes and extra charges
like service contracts and registration fees.
- The capitalized cost reduction is similar
to a down payment. If you're trading in a car, make sure
the dealer applies the trade-in value to the price your
lease is based on. The trade-in credit may reduce your
down payment or monthly payments.
3. Ask whether extra charges will be
assessed for excessive mileage, wear and tear, disposition
and early termination, and find out the amount of these
charges. Most leases allow you to drive 12,000 to 15,000 a
year; if you put on more miles, expect a charge of 10 to 25
cents for each additional mile. You may think the ding in
the door or coffee stains on the upholstery are normal wear
and tear; to the lessor, it may be significant damage. Check
out penalties for an early return; expect to pay a
substantial charge if you give the car up before the end of
your lease.
4. Make sure the manufacturer's warranty
covers the entire lease term and the number of miles you're
likely to drive.
5. Consider "gap insurance" to cover the
difference - sometimes thousands of dollars - between what
you owe on the lease and what the car is worth if it's
stolen or totaled in an accident.
6. Before you sign the deal, take a copy
of the contract home and review it carefully away from any
dealer pressure. Be alert for any charges that were not
disclosed at the dealership, like conveyance, disposition,
and preparation fees.
7. Federal law requires lessors to
provide lease cost information before you sign the lease.
Take a copy of the
leasing worksheet form to the
dealer and ask them to complete it. Some dealers may be
willing to provide the information during your shopping
process. If the dealer declines, consider shopping
elsewhere.
For more information about buying or leasing
a car, visit the FTC's Web site at
www.ftc.gov/autos.
|
