Only the prepared survive
Knowledge and strategy are the keys to negotiating a good leasing
deal.
Ignorance -- not knowing terminology
or how the lease works, or not being told all of those details by
the dealer or lease company -- is the main factor in paying too
much for a lease. In Florida alone, the state attorney general's
office has identified 40 types of fraud in leasing. Most rely on
customer ignorance to work.
State attorneys general, consumer
groups and lawyers have developed The Reality Checklist for Vehicle
Leasing and they claim that an uninformed would-be leaser could
be hurt by as much as $4,000 in a single lease.
One thing to keep in mind: A lot
of drivers pay thousands more to lease the same car they went in
to buy. Commonly, these buyers are talked into a lease without understanding
all the leasing details. To find out if leasing makes the most financial
sense for you, answer the questions in this calculator.
Leasing gives dealers more options,
more places to give and take than buying does. Make sure you
are perfectly clear on every step along the way and know exactly
what you are paying, when and what for, before you sign a lease.
What you are doing in a lease is
paying for the difference between the value of the car brand new
on the showroom floor (the capitalized cost) and the amount the
dealer reckons it will be worth when you bring it back at the end
of the lease (the residual value).
Costs are the key
So be sure you know what you are paying for the car (the capitalized
cost) just as you would if you were buying. One key is to know how
much that new car is worth before you hit the showroom. Start on
the Net -- at places such as Edmund's Automobile Buyers Guide, CarPoint,
Autopedia or AutoSite.
After you go to the showroom and
get to haggling on the price, make you sure are clear on the capitalized
costs before you sign! That cost is also a good basis for comparison-shopping
lease deals from different dealers.
That's not the only basic question
to have answered with complete clarity when you bargain.
Remember that a lot of numbers
have to line up, just like buying. No down payment is fine, but
that saving will probably be balanced out in the costs somewhere
else in the lease. So perhaps a down payment and a different lease
length or better mileage allowance would be a better deal for you.
Your lease may allow you to purchase
the vehicle when the lease is up. Find out what the costs would
be (it is usually the residual value stated in the lease). That
figure plus your total costs from start to finish of the lease will
tell you what it will cost to own that car in three years (or whatever
the lease term is) down the road.
Before you lease, consider whether
you would buy the vehicle at the end of the lease. You may have
no intention of doing it -- but consider this "emergency planning"
and know what it would cost, just in case. If the figure is outrageous,
maybe you're not looking at the best lease deal.
And always remember to read every
single word and number in the lease -- and be sure you understand
them -- before you sign anything.
-- Updated: Jan. 12, 2005
