Ownership is still one of the greatest feelings in the world. I’m not talking about a house you have with a big mortgage because you really don’t own it yet. The day you pay that puppy off will truly be cause for celebration. It’s a feeling that less than the majority of people get to experience in America. When it comes to your automobiles, I’m a much bigger fan of owning versus leasing. The one time in my life I had a leasing experience, back in 1993, with my Nissan Altima, I felt like an upside down pineapple cake by the time it was all said and done. Since that purchase, I will only buy used cars and I will only own them. However, there are cases where leasing can make sense here are your smart money moves on how to do this right.
- Negotiate The Price, Not The Payment– One of the trick people get suckered into when they go to lease a car is the old ‘how much can you afford per month’ trick. By committing to a monthly number, there are all sorts of ways financing can make this number give you the car of your dreams. Remember, the lease payment is going to be derived off the price of the car. So, the first part you need to concentrate on is agreeing on the price of the car with the dealership. Once you do that, then you can discuss whether you will lease the car.
- Ask Lots Of Questions About Financing– When it comes to leasing a car, you need to make sure you always discuss how the car is being financed. Often, the financing will be dependent on your credit score which is why you want to review this before you go car shopping. However, from dealer to dealer, you may be able to work on negotiating how the car is going to be financed.
- Mileage, Mileage, Mileage– Typically, the lease will stipulate some annual mileage number that if exceeded will cost you more for every mile your drive over the allotted amount. For example, it may say you can drive 12,000 miles a year for the three year lease and for every mile you drive above 36,000 miles it will cost you somewhere between $.10 cents and $.30 cents per mile. This can be a big fee you’ll have to pay at the end of the lease and the dealer intentionally puts in these amounts to ensure that the resale value will be more when they sell the car to a second buyer.
- The Wear And Tear– Leases typically give you some leeway around what they call normal “wear and tear” on the car during the course of time you are leasing the vehicle. This is where you need to be careful and read the fine print. Normally, “wear and tear” may be minor scratches, dings, etc. that don’t exceed some length such as a ½ inch in diameter. Depending on the credit company you deal with they will have their own definition of “wear and tear”. If you have children who are going to be getting in and out of the car with school and sporting activities, you need to read the wear and tear on mats, seats, etc. Do you really want to be worried every time you park your car at Target, whether or not someone is going to ding your door? This is especially important if you lease the car for more than 2 or 3 years when the wear and tear really starts to set in to the car.
- The Monthly Payment Sucker– Automobile dealerships are for profit entities, which is sometimes hard to remember in the heat of the moment when you go car shopping. With a lease, the dealer is going to run the numbers knowing that they get to sell this car TWICE! Thus, if they have to price the sale of renting the car only to know that they have to sell it again later, how do you think that they will stack the odds? Of course a lease payment for three years is going to be cheaper than you making a purchase payment over five years. You want to make sure you aren’t going to be the person buying an upside down pineapple cake.
Leasing isn’t going to be for all people, but in some circumstances it can make sense even though it isn’t my preference. Use these five tips to make sure you get the best deal when you lease a car.
Written by: Ted Jenkin
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