You need to do similar homework if you are considering leasing. In addition to having a new car every few years, a major attraction is that "you get more car for the same monthly payments".
May 16, 2006 (Press Release) --
You need to do similar homework if you are considering leasing. In addition to having a new car every few years, a major attraction is that "you get more car for the same monthly payments," notes Robert Haber, a New York City art dealer who recently leased a 2005 Lexus RX330 sport utility.
These pluses will seem convincing to many new car shoppers, but to lease successfully, you need to understand the transaction. The concept is simple, but the execution often is highly complicated. When you lease, you pay, in effect, for the loss in value of a vehicle for the three or four years you are leasing it, plus interest on that amount. Dealers will want to talk to you only about monthly payments, but to lower those payments you need to understand all the moving parts.
Terms To Know
Leasing comes with its own jargon. The most important factor in determining payments is the difference between the starting cost, known as the capitalized cost, and the estimated value at the end of the lease, called residual value. Auto brands that have high resale value, such as Mercedes-Benz, are good candidates for leasing. Usually the best available lease deal will be the one offered by the manufacturer's captive finance subsidiary, or subvented leases, a promotional effort designed to help move the vehicles. These deals are most common for luxury brands, and typically the residual value will be fixed, as will the interest rate--known as the money factor. Thus your only weapon to lower payments is to negotiate down the capitalized cost--just as you would try to lower the purchase price if you were buying the car instead.
Leasing, of course, has its pitfalls.
Source: http://search.msn.com
by Jerry Edgerton
These pluses will seem convincing to many new car shoppers, but to lease successfully, you need to understand the transaction. The concept is simple, but the execution often is highly complicated. When you lease, you pay, in effect, for the loss in value of a vehicle for the three or four years you are leasing it, plus interest on that amount. Dealers will want to talk to you only about monthly payments, but to lower those payments you need to understand all the moving parts.
Terms To Know
Leasing comes with its own jargon. The most important factor in determining payments is the difference between the starting cost, known as the capitalized cost, and the estimated value at the end of the lease, called residual value. Auto brands that have high resale value, such as Mercedes-Benz, are good candidates for leasing. Usually the best available lease deal will be the one offered by the manufacturer's captive finance subsidiary, or subvented leases, a promotional effort designed to help move the vehicles. These deals are most common for luxury brands, and typically the residual value will be fixed, as will the interest rate--known as the money factor. Thus your only weapon to lower payments is to negotiate down the capitalized cost--just as you would try to lower the purchase price if you were buying the car instead.
Leasing, of course, has its pitfalls.
Source: http://search.msn.com
by Jerry Edgerton
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