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Now
that I've described some of the basic differences between
"buying" and "leasing" (on the previous
page), let's look at the details.
The clients who ARE likely to benefit from leasing:
-
Trade vehicles frequently (every two or three model
years).
-
Drive 12,000 to 25,000 miles each year.
-
Prefer new vehicles to used.
The clients who ARE NOT likely to benefit from
leasing:
-
Tend to keep their cars for many years.
-
Drive less than 12,000 or more than 25,000 miles each
year.
To my credit, I have spent many of my 20 years in the
business as a lease manager. I know and understand leasing
from every conceivable angle. My knowledge and experience
translate into a certain level of expertise where leases
are concerned. I put this to use when negotiating your
lease with the dealer.
However,
should you decide to negotiate on your own, be familiar
with the following words and their meaning:
Capitalized
Cost. This describes the actual total amount being
charged for the car, accessories and any other related
lease fees & charges.
Capitalized
Cost Reduction. This describes any down payment
amount being applied to the lease. While this may lower
your lease payment, it is generally not in your best
financial interest to apply "extra" cash toward
a lease agreement.
Security
Deposit. A security deposit is typically held by
the leasing company, pending determination of excess
wear-and-tear or damage to the vehicle upon its return.
Acquisition
Fee. A charge to cover the processing of the paperwork
of the lease.
Rate
Factor. Used to figure the interest on a lease.
This can be difficult to understand. Here's the formula
- to obtain the interest rate, multiply the rate factor
by twenty-four. For example:
0.00300 x
24 = 7.2%
0.00325 x 24 = 7.8%
0.00350 x 24 = 8.4%
Disposition
Fee. The lease company's charge for dispensing of
the vehicle at the lease's end.
Residual.
Describes the leasing company's best guess as to the
value of the vehicle at the end of the lease term.
Purchase
Option. The amount the car will cost you should
you decide to buy at the end of the lease.
Early
Termination. In most cases, turning in your lease
car before the end of the term can be very difficult.
Generally all remaining payments will be due at the
time of turn-in. There are a few exceptions, but not
many. You should be prepared to stay in the leased car
throughout most, if not all, of the term.
If
all this seems to be a bit too much, let me handle it
for you. I know this like the back of my hand!
Frank M. Price, Owner
803-732-1150
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