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Key questions to ask when leasing

6. What is my trade-in worth and how will it be applied to the lease cost?
It may become part of the money you pay before you get into the lease, or it may help lower monthly payments. Make sure before you sign that you can see where the trade-in money has been applied to what you are paying.

7. What happens if I default and can't make a lease payment or want to bring it back early?
Okay, so you don't expect that to happen, and neither does the dealer. But ask! You may want to know how you can keep the car through one troubled month when you can't pay; find out how that would be handled. But you may have to give up the lease and then you'll face an early termination charge. Find out what that would be.

8. Can the lease be extended?

You can usually keep it going, month by month at the same price. But be sure that will not change the terms of the original lease or bring potential new costs into play when you finally turn it in.

9. What is the "money factor?"
This is what we might call the cost of the money you are putting into the vehicle -- an equivalent to the interest rate you would pay on a new car. The "money factor'' will be a fraction that seems bewildering and meaningless to many people. But multiply it by 24 and you will have an indication of the interest rate you are paying for the lease. That rate should be very close to the interest rate you would pay for a new car.

10. Can I lease a used car and save money?

Yes. And a used car has already lost a huge chunk of it original value, a hit you don't have to take. But beware! The basic rule of thumb says don't lease something too old -- a car that has just come off a two-year lease may be the best bet, and make sure both the current capitalized value of the car and the estimated residual value at the end of the lease are fair -- something much more difficult to do with a used vehicle. Just like buying, leasing a used vehicle means those payments will be lower!


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