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How To Get Out Of A Lease Before Your Contract Expires 257

(category: Auto-Leasing, Word count: 299)
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How to get out of a lease before your contract expires

When your lease is up, you can simply turn in the keys and lease another

car or buy a new one. But how about getting out before the lease ends?

Maybe you can't afford the sky-high payments on that silky Jaguar JX V6

model anymore or you've just had a baby and you need a larger and more

spacious vehicle?

Unfortunately getting out of a lease is not as easy as getting in! A

leasing contract is difficult and expensive to terminate early. Simply

turning in the keys and walking away from a lease can result in stiff

penalties. You credit could be ruined and you could even get sued for

breach of contract.

It's not all doom and gloom though. Actually, there is a number of

options available to you.

You can sell the car yourself and pay off the bank. This can be cost

effective if the market value of the car is close to the buy-out number.

Do not hesitate to exercise this option even at a loss if it happens to be

lower than the termination fee.

Your best option, though, is to transfer your lease for someone who would

"assume it" and take it off your hands. There is a whole set of potential

buyers looking for short-term leases without all the hassle and extra

costs. Check with family and friends or use the services of lease-

assumption websites, like swapalease.com, to list your car. Make sure you

check the credit worthiness of the new lessee and provide the car in good

condition.

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Lease Financing

(category: Auto-Leasing, Word count: 274)
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For auto-consumers, crunching the numbers is one of the most difficult and

confusing aspects of leasing.

Take the finance charge on a lease for instance. Most people just don't

understand how this is calculated on capitalised cost AND residual value

instead of just the capitalised cost. For most, it seems plainly obvious,

just as is the case when purchasing, that a charge should be levied on the

capitalised cost of the vehicle.

Well, no quite! When you lease a car, you're only using the car over a

specified period of time with the option of buying the car. The residual

value represents the "loan balance" at the end of the lease. If you add it

to the capitalized cost and divide by two, you'll get the average

capitalized cost outstanding over the lease term. Let us suppose you're

leasing a car with a capitalized cost of $25,000 and a residual value of

$15,000. You average balance over the lease term, irrespective of how long

it is, is $20,000 - the sum of the two divided by two -.

Using this sum works because the money factor is the annual interest rate

devided by 24, rather than 12. Continuing with our example and assuming an

interest rate of 6% APR:

$30,000 X (6 per cent / 24) = $75

(Capitalized cost + residual value) X (interest rate / 24) = Monthly

finance charge

This finance charge is added to the depreciation charge to calculate the

monthly payments on your lease.

(Word count: 248)

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Leasing And Your Credit Score

(category: Auto-Leasing, Word count: 197)
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Your credit score is part of the leasing decision. When you apply for a

lease, your lease company will typically look at your credit score to

decide whether you to approve the application.

The leasing contract stipulates that you make regular, monthly payments

over your lease term. The credit score you lease company requests

identifies how likely you are to make such payments. It is simply a number

calculated according to a model that takes into account your payment

history, any amounts you owe and credit currently in use.

It is very important to keep a good credit-score, usually above 700, to

qualify for a lease or any other lending decision. Start by ordering your

credit report from Fair Isaac Corp, the company that creates your credit

score. If erroneous data is held about you, then contact the creditor

responsible and get such information corrected.

Your payment history is the single most important factor in determining

your credit score, so get in the habit of paying everything you owe on time

and keep the balances low in your credit cards.

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Luxury Cars And Resale Values

(category: Auto-Leasing, Word count: 202)
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When it comes to ultra-luxury, high-end vehicle leasing, there is no doubt

that the best deals are those cars that hold their value. With this in

mind, we single out a few truths about residual values that consistently

apply to high-end leasing.

The most determining factor when it comes to resale values is public

perception of the brand, not its reliability ratings in quality surveys.

Take the Jaguar for example: it is consistently rated as a quality car, but

because of questionable reliability perception among the public, it takes a

sharp dip in value at the end of its lease-term

Higher-tech options and other cutting-edge features do not necessarily mean

the car will fare better. By the time your car is two years old, better

and cheaper systems will render the laser-guided cruise control, navigation

systems and built-in cell phone obsolete. Look for functional features,

such as automatic transmissions, power windows and wheel-drive to enhance

the vehicle's value in the used-car market.

Used-car buyers view less favorably luxury vehicles that come with big

incentives. These are perceived as questionable in quality and

reliability.

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Leasing With Bad Credit

(category: Auto-Leasing, Word count: 250)
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Have you been refused a car lease? Chances are you have less flawed credit

history. Know what's involved and what you can do to build good credit

history.

Credit score is a measure of your credit worthiness used by leasing agents

to determine whether you are eligible for a lease. You credit score is

based on your past and present credit history, and can range anywhere from

350 to 850. A measure above 720 is considered a "prime score" and will

land you the best rates. If you are below 640, then you are "sub-prime"

and will be considered bad rating by the bulk of leasing agents. This is

where all the trouble in getting that lease comes from.

Ask for your FICO Credit Score from the Fair Isaac Corporation (FICO)

which details your credit score held by all three leading credit score

agencies in the country. Compare the three credit scores and determine if

any agency is holding erroneous credit data about you. Contact the

reporting agency and getting corrected.

If there are no mistakes in your credit report, then you can take some

steps to maximise your score to go above the threshold of 640. Pay your

bills on time and pay down any credit card debts you have. Do not take any

new accounts as this might increase the likelihood of you getting into bad

credit thus worsening your credit score.

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How To Lease A New Car

(category: Auto-Leasing, Word count: 492)
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Whether you lease a car to get into the latest models or have better purchasing

flexibility, getting a good deal is always bound to give you a lift. Use

these guidelines to help you spot one:

Check incentives: be on the look-out for factory -subsidized lease deals.

Car manufacturers realise that consumers who lease vehicles from them are

more likely to be repeat customers than those who simply purchase vehicles.

Through their leasing companies, they adjust the residual value and offer

low financing charge. Other auto-manufacturers are also starting to give

incentives on leasing, called leasing subventions. They offer these

subsidies to put slow-selling models on the street, saving you even more

money.

Set up a competitive: bidding environment to get the lowest price. If you

already have an idea in mind of the make, model and trim level of your

desired car, attempt to calculate your own lease payment before you go

shopping to avoid paying through the roof. Check online comparison tools or

use a lease calculator to check your lease payment based on purchase price.

This gives you greater negotiation leverage as you solicit quotes from

various leasing companies.

Make sure you know all the fees involved at the beginning of your lease:

you may have to pay fees for licenses, registration and title. Other fees

include acquisition fees, freight fees and local or state taxes. At

lease-end, you may have to pay a disposition fee and charges for extra

mileage and any excess wear. Be aware that some of these fees - like

acquisition and disposition fees - are negotiable.

Know your mileage needs: almost all leases limit the number of miles per

year by imposing typically 10 to 20 cents per excess mile over 15,000 miles

a year. If you are the kind of high-commuter who puts 40,000 miles a year

on his car, then you might end up running thousands of dollars in hefty

penalties at the end of your lease. Be smart and negotiate a higher-mileage

limit or pad you excess miles at the beginning of your lease to avoid

robber tax rates for excess miles.

Almost all leases limit the number of miles per year by imposing fees

typically 10 to 20 cents per mile over 15,000 miles per year. If you are

the kind of high-commuter who puts a lot miles on his car, then these costs

can add up quickly. Negotiate

Include GAP coverage: make sure your lease includes GAP coverage. This

covers you in the event of the vehicle getting wrecked, stolen or totalled.

Without GAP insurance, you leave yourself wide open to thousands of dollars

in leased obligations. Check if the GAP coverage is included so you don't

pay it twice.

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How To Spot A Good Car Lease

(category: Auto-Leasing, Word count: 479)
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Leasing has been lauded as your cheapest ticket to keep up with the

industry's hottest vehicles and trends. The jury, however, is still out

on leasing: with the industry long on hype and short on detail, it is

difficult to distinguish between a genuinely good deal and a downright

up-selling exercise.

So how do you spot a good deal?

First, you need to find out if there are any down payments on the lease. A

down payment refers to the lump sum amount that you pay upfront, either in

cash, non-cash credit or trading allowance, to reduce your monthly payment.

You should think twice before putting money down on a lease: not only are

you getting a rough deal, as you're essentially forfeiting the general rule

of leasing: not putting any cash upfront, but the money is not recoupable

at the end of your lease. There is another big disadvantage: in the event

of your car getting damaged or stolen, you insurance and the gap cost will

not cover the loss.

Mileage Limit

Most leasing companies allow you a limit of 45,000 free miles over the

length of a 3-year lease. This may seem like a good deal at first sight,

but when you consider it only comes to 15,000 miles over a 12 month period

it's not difficult to foresee why it might be difficult to stay within this

limit. Even people working from home have little trouble putting 15,000

miles on their cars.

If you exceed the mileage limit, the penalty for each excess mile can be as

high as 20 cents. This can add up quickly over the length of your lease: an

additional 4,000 miles a year over the length of a 3-years lease contract,

will end up costing you an extra $2,400 in excess mileage charges!

Be realistic about your mileage needs, especially if you have to regularly

commute over long-distances, before you sign the contract. Consider padding

the miles that you expect to use since it is less expensive to contract for

the extra before you sign than it is to pay the extra charges at end of

your lease.

Sales Tax

Sales tax is usually capitalized and added to the monthly payments.

However, some dealers choose not to include it in their calculations to

drive the advertised lease payments even lower. What they do instead is

state in the small print that the monthly payment excludes "sales tax".

Make sure you carefully read the fine print for any extra, hidden costs not

included in the advertised monthly payment. Unscrupulous fees that

typically slip through the cracks include sales tax, registration and title

fees.

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Benefits Of Leasing

(category: Auto-Leasing, Word count: 468)
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Despite aggressive low-interest financing, cash-back offers and other

purchasing incentives offered by leading auto-makers to buyers, leasing

numbers keep increasing steadily over the years. Leasing is not only an

attractive financial proposition to most auto-consumers, but also a

lifestyle and preference choice.

Benefit Number 1: Keeping up with the latest trends

Leasing is sometimes more of a personal and lifestyle choice than a

financial one. Many people are not comfortable with the idea of owning a

vehicle over a long period of time. They'd rather keep up with the latest

trends of the industry and drive the latest models every two to three

years.

Leasing a car gives you the convenience of having the latest technology

and safety innovation, such as an electronic stability system, DVD

entertainment systems and advanced stereo equipment. If you are willing to

forego ownership for the latest set of wheels, than leasing is your best

option.

Benefit Number 2: Purchasing Flexibility

Leasing also offers purchasing flexibility: it allows you to defer the

purchasing decision while using the car. You don't have to haggle with your

mechanic over repair expenses, deal with hefty maintenance bills or worry

about a depreciating asset. Provided you can keep the vehicle in good

condition and stay within the contracted mileage allowance, you're

effectively getting a test drive for the length of your lease.

At the end of your lease, you can purchase the vehicle or simply turn in

the keys and walk away. No questions asked.

Benefit Number 3: Cash Flow

Leasing offers many short-term benefits. It reduces your initial cash

outlay as you do not have to pay the large down payment required for car

ownership. You only pay for the depreciation on the car - only the part you

will use during your lease, not the entire vehicle. This results in lower

monthly payments and frees even more cash. This cash can be put to use more

intelligently elsewhere than the questionable investment of owning a

depreciating asset. If you are self-employed or use your car for your job,

then you can write off your leasing payment as a business expense.

Benefit Number 4: Negotiating Leverage

Although it may seem a little unorthodox in this industry, almost

everything about leasing is negotiable. If you know all the fees involved,

you can lower your monthly payments, negotiate the purchase price of the

vehicle at the end of the lease and contract additional miles on top of

your mileage limit. You can also do some shopping around and compare deals

from different auto-insurers to get the cheapest GAP insurance for your

lease.

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Leasing Glossary

(category: Auto-Leasing, Word count: 544)
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In order to get a good leasing deal, you need to understand leasing jargon.

Read through this leasing glossary to get an overview of the basics:

Acquisition fee: A fee charged by a leasing company to begin a lease. Not

all leasing companies charge an acquisition fee but if charge it starts at

about $300 and is seldom negotiable.

Capitalised cost: The total selling price of the leased vehicle This also

accounts for taxes, title, license fees, acquisition fee and any optional

insurance and warranty items you elect to fold into the lease and pay

overtime rather than upfront.

Depreciation fee:

Forms part of the monthly lease payment charge and accounts for the loss

in the value of the car at the end of the lease. The vehicle's list price

minus the expected residual value at lease end is divided by the number of

months in the lease to give the depreciation fee. Suppose you decide to

lease a vehicle with a retail price of $23,500. The leasing company

estimates that after a three year lease, the vehicle will be worth 35% of

its original retail value, or $8,225. The difference, $15,275, divided by

the number of months in the lease, 36 months, gives us the depreciation fee

($424)

GAP insurance Pays off the lease balanced if the vehicle is wrecked, stolen

or totalled.

Inception fees any fees that are due at the beginning of a lease. These

typically include a security deposit, acquisition fee, first monthly

payment, taxes and title fees.

Mileage allowance The maximum number of miles a leased vehicle can be

driven a year without incurring an excess mileage penalty. A typical

mileage allowance is 12,000 to 15,000 miles a year, although this is

negotiable with your leasing company.

Mileage charges a penalty that you incur if you exceed your mileage

allowance on a leased vehicle. Typical mileage charges are 10 to 20 cents

per excess mile.

Money-factor A fractional number, such as 0.00043, used in calculating your

monthly lease payments. You can get a rough estimate of the annual

percentage rate on your lease by multiplying the money factor by 2,400. If

a dealer quotes a money factor such as 3.4 than you can get the equivalent

APR, 8.16, if you multiply by 2.4.

Residual value Residual value is the amount of money the leasing company

says your leased vehicle will be worth when your lease ends. Higher

residual values lead to lower monthly payments but higher lease-end

purchase cost if you decide to keep the vehicle.

Security deposits an up-front amount that your leasing company required at

the beginning of a lease to safeguard against non-payment. This is

generally refundable at the end of your lease.

Termination or Disposition fee The amount you have to pay the leasing

company at the end of your lease if you decide not to purchase the vehicle.

Wear-and-tear charges Extra charges you have to pay at the end of your

lease for any wear and use the leasing company considers above normal

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