by mritunjays82 » Wed Jun 23, 2010 11:04 am
A growing trend among consumers lately is the decision to lease a car rather than buying one. However, this option entails some inherent problems, not the least of which is that many people don't have a strong grasp on what leasing actually entails. On one hand, if you buy your car, you can eat in it, refrain from washing it, and ultimately do whatever you like because you own it. If you lease one, on the other hand, you must be careful to take good care of the car or else you'll have to pay for the damages you cause.
(link removed by mod-lori) appears to offer an obvious initial benefit: you pay less per month than you would if you buy the car with a loan or other financing option. Further, you always have a car that's under warranty and permanently new, as standard leasing only lasts for a few years, at which point you choose to lease a new car.
While buying your car allows you to do what you like to it, your leased car will generally never require you to pay for any repairs that the car may need (assuming, of course, that you aren't responsible for the problem in the first place). A leased car is usually always under the manufacturer's warranty simply because you must return it before any major problems should come up. This could afford you an added feeling of safety that a new car (with no such permanent coverage) Simply could not give.
There is no definitive reason for you to decide to lease a car instead of buying one. The choice depends on far too many external factors, and thus the answer will vary from person to person. However, the site above should provide you with adequate advice to help you at least make a more informed decision about which option is right for you. Leasing could save you a lot of time and money, but that's only if your particular situation fits the reason to lease.
(link removed by mod-lori) appears to offer an obvious initial benefit: you pay less per month than you would if you buy the car with a loan or other financing option. Further, you always have a car that's under warranty and permanently new, as standard leasing only lasts for a few years, at which point you choose to lease a new car.
While buying your car allows you to do what you like to it, your leased car will generally never require you to pay for any repairs that the car may need (assuming, of course, that you aren't responsible for the problem in the first place). A leased car is usually always under the manufacturer's warranty simply because you must return it before any major problems should come up. This could afford you an added feeling of safety that a new car (with no such permanent coverage) Simply could not give.
There is no definitive reason for you to decide to lease a car instead of buying one. The choice depends on far too many external factors, and thus the answer will vary from person to person. However, the site above should provide you with adequate advice to help you at least make a more informed decision about which option is right for you. Leasing could save you a lot of time and money, but that's only if your particular situation fits the reason to lease.
Posted: Wed Jun 23, 2010 10:45 pm Post Subject:
your leased car will generally never require you to pay for any repairs that the car may need (assuming, of course, that you aren't responsible for the problem in the first place). A leased car is usually always under the manufacturer's warranty simply because you must return it before any major problems should come up.
Don't know where you get this idea. Return the car before major problems come up? How do you figure that?
One of the most misunderstood facets of a lease is the "residual" value. While the manufacturer's warranty may cover electrical systems, mechanical breakdowns, power train, and the like, it does not cover "wear and tear" or abuse -- like driving the vehicle at high speed while low on oil and damaging the engine.
All those scratches, dents, dings, and stains to carpet and upholstery are never covered by a warranty. But they all add up to diminished value and a gap between the estimated "residual" value and the actual value at lease-end.
The residual, if set too high for the purpose of lowering lease payments, can result in a huge deficit at any point in the lease, especially in a total loss situation, which results the obvious need for "gap" coverage in one's auto policy.
Leasing a car is generally only a reasonable proposition for persons who can obtain a tax advantage, such as a self-employed person, a business owner, or a corporation, either of whom could obtain a tax deduction for the value of the lease payments.
Too many persons who cannot afford the cost of purchasing/financing a new car are steered into leases with their lower payments, only to discover later that they owe money on the vehicle, money they don't have, and then find themselves steered into a new lease where the shortfall has been hidden inside the lease, and the financial problems compound.
Bad leases for people who cannot afford to buy a vehicle is the auto equivalent of subprime loans in the home mortgage industry. Lenders are quick to fund them because the debt is secured by the vehicle, and they're often quicker to repossess compared to an auto loan -- miss one lease payment, and you might wake up to find your vehicle "gone" in the morning. The problem is decades old, and has never become the kind of "public problem" that home loans have, simply because the amount of money involved is exponentially less and the loans are not government guaranteed.
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