A. Leasing is not for everyone by a long stretch. A lot of dealers will use leasing payments in there advertising
to draw people in. First of all if you don't know anything about leasing do not jump into until you know the facts. It has
been my experience that the payment buyer is the most volnerable type of buyer to get talked into a lease. Believe me there
are salespeople out there that can talk you into a lease. They only tell you the good sides of it. Don't get me wrong leasing
is a great way to finance a car but only if you fit the right perimeters. That is really all a lease is a different way to
finance your new vehicle. some dealers even lease used cars, Those are few and far between anymore thou. I will break this
down for you step by step.
Who should lease a vehicle?
A. You are going to think I am crazy here but read all the way through this paragraph. If you put an unusually
high number of miles on a car ever year you should consider leasing. Think about this say you drive 25,000 miles or more a
year. If you purchase a vehicle and finance it for 5yrs Ok. At the end of five years you have a car with 125,000 miles on
it right? What do you think that car is worth. Yea not much right. so lets back it up a little at the end of 3 yrs you will
have 75,000 miles it. Lets say the car was 350.00 per month and you paid 20,000 for it. At the end of 3 yrs you will have
paid about 12,600 on your loan. That means you still owe about 8,000 for you vehicle 3yrs old and 75,000 miles or more on
it. You will more than likely be about 5,000 upside down if you tried to trade it. The average person trades ever 33 months.
If you trade it in you will start out over 100.00 a month higher just for what you have to roll over. Take the same situation
but lets lease it this time. Never do more than 24 or 36 months on a lease I'll tell you why in a bit. Now the standard miles
on a lease are 15,000 per year which nis not enough for you. You can adjust the miles on any lease and yes the payment will
go up. But lets just say the standard lease payment here is 300.00 per month ok. This is 50.00 less that the finance price
but we need to ad about 10,000 more miles per year right. So lets say that jumps the lease payment to 400.00 per month. Now
we are 50.00 more a month than the financing option. Lets take a look at this picture in 36 months now. As we said on the
finance option you would have 75,000 miles on t about the car and still owe about 8,000 on it. At the end of 36 months on
the lease you will have paid in about 14,400 dollars which is 2700.00 more that you paid on the finance option. Doesn't sound
so good does it? Well take a look at where you are on the lease. At the end of 36 months you owe nothing you can just walk
away for the car. This leaves you with a little over 5,000 that you didn't have to roll over to your next purchase. Saving
you about 100.00 more a month in payments on the next one you buy. Most people say "I don't want to lease because you
don't ever own the car. Well guess what will happen if you miss a couple of payments on your finance opt. Yes sir the bank
will come and take it a way. In other words you don't own it either way.
B. A few extras about the lease. Just about every lease today comes with what is called GAP insurance. Lets
say one year latter you got in an accident and totaled your car. Your insurance co. probably will not pay off the whole amount
do to depreciation. Well that leaves you holding the bag for the difference. It can be as much as 5,000 or even more. GAP
insurance will pay that difference off no money out of your pocket. This is how the banks protect there money so every lease
will have this built into the payment. This protection has been made available on retail purchases as well and I highly endorse
this product. It cost between 400 to 600 for the life of the loan which is only a few bucks more each month. Again if they
don't tell you about it ask them if they have it. In the past 20 yrs I have had a lot of my customers total there cars and
have to roll the difference over to the next car or pay it out of pocket. Please if you don't do anything else I suggest here
buy the gap insurance Ok.
C. All leases come with an umbrella protection as well. What that means is you get in an accident and god forbid
someone gets killed. This kind of stuff happens every day just read your local paper. Well your insurance company will pay
what ever protection you had if it is 100,000 or what ever. If the family of the victim wants to sue for the expenses and
it exceed your policy, you could lose everything. But because you leased the car anything over and above your insurance is
paid by the bank you leased it through.
This Is something they don't want you to know
Hear is the formula for working out a lease. You do have to collect a little information before you can do this. You
first need to know the residual factor second you need the money factor{interest rate}Third you need to know the M.S.R.P.
of the vehicle. This may be hard for some but I will do this in a way of an example so all you have to do is replace the numbers
with your own.
M.S.R.P.=20,000 the money factor is .00250 and lets say the residual is 45%
you first need to figure out your residual simple take the 20,000 times the 45%=9,000.00 this is your residual amount.
Now lets say you negoptiated 2,000 of the M.S.R.P. price and you are paying 18,000 for the vehicle. A lease payment is broken
into 3 different numbers 1. the interest payment 2. The tax payment and 3. The deprecation payment. to figure the interest
payment you add the MSRP + the residual price so we have 20,000 + 9,000 which = 29,000 X the money factor of .00250 = 72.50.
now to figure the deprecation payment you would subtract the residual value from the selling price and divide that by the
number of months you are goin to lease. 18,000 div by 9,000 = 9,000 - 36 months =250.00 so then take the depercation payment
plus the interest payment and ad them 250.00 + 72.50= 322.50 this is your base payment. The tax payment depends on where you
live here it is 6% so I would takt the payment X 6% = 19.35. Now my total lease payment on this car is 322.50 + 19.35 = 341.85.
Now thay wasn't hard was it. Most of the masnufactors web site have a lease calculator on them it makes it much easier. If
you put any cash down on a lease it will lower the payment to figure it you jaus take the amount of cash down off the selling
price and continue with the calculations.
