What You Should Know About Vehicle Leasing

by News Guy on October 25, 2012

(Guest Post)

The recent credit crunch limited car leasing options for many people and businesses, but now leasing is beginning to pick up again.  Auto leasing can be tricky and it is even more confusing when the salesperson is using terms that you do not understand.  It is important to avoid the pitfalls of vehicle leasing to make the deal beneficial for you.  If you are interested in leasing a vehicle, there are some things that should be kept in mind.

How Vehicle Leasing Works

The dealer sells the car to a leasing company and in return for monthly lease payments, the company lets you use the car for a fixed period of time.  When this time period expires, you can either return the car to the leasing company or purchase the car for ownership.  The monthly payments made to the leasing company cover the sale price plus finance charges and taxes associated with the sale of the vehicle.  Fleet management options may also be available.

Price And Value

When deciding whether to lease a vehicle, the price of the vehicle and it s likely value at the lease’s end are important items to consider.  You should take the time to do some research on the vehicles that you are interested in before heading out to view them in person.  This allows you to focus on negotiating the price of the car while at the dealership.  You should concentrate on getting a contract with the smallest amount of money down and the lowest interest rate.  The residual value is the estimated value of the vehicle at the end of the lease term and the amount that you will be required to pay to purchase the vehicle when the lease is up.

Payments And Fees

Two months worth of payments will be due when the lease is signed.  Half of that payment applies as the first month payment and the other half is logged as a security deposit.  There are also additional fees added to the price of the lease to cover the work of the dealership and the bank employees putting the deal together.  A one-time fee of around $500, often logged as an acquisition or bank fee, is required when the lease is signed.  When the car is returned at the end of the lease period, the consumer could be charged a disposition fee of between $250 to $450 if they decide not to buy the car.

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