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Dealer Leasing Tricks

(category: Auto-Leasing, Word count: 465)
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Too often when it comes to auto-leasing, people get so dazzled by the

myriad terms and the jargon thrown their way that they end-up paying

through the nose, relying on a dealer's "help" than their own informed

decision.

Here is a look at some of the tricks dealers use to pad their profits and

leave the customers shelling hundreds of dollars more than the deal should

be worth.

Trick 1: Leasing always a better deal than buying

Dealers use the lure of lower-monthly payments to entice customers to sign

for long-term loans, with terms stretching for five years or more, making

the payments even lower. There are two catches with such lengthy contracts:

higher mileage, exceeding the prescribed limit, and hefty repair costs.

With

leases charging on average 10 to 20 cents a mile for any extra mile over

the agreed amount in the contract, and warranties only covering three

years, you leave yourself wide open for hefty charges for excessive

mileage and wear and tear.

Trick 2: Cheap 2-3% APR rate on your lease

The dealer is not quoting the interest rate you would be paying on your

lease; he's rather giving you the lease money factor. Whilst similar to an

interest rate and important in determining your monthly payment, a more

accurate rate is calculated by multiplying the money factor by 24. For

example a "cheap" 3% money factor is 24 X 0.003 = 7.2%. This gives you a

better sense of what your annual interest rate on your lease contract is.

Trick 3: Stress-free early lease termination

Dealers know consumer driving needs change and they would like to have the

option of getting out of a lease commitment sometime down the road, before

their lease ends. Truth of the matter is, when you sign for a lease, you

are effectively saddled with monthly payments for the remainder of the

lease term and there is little-choice of getting out early. Lease contracts

carry hefty financial penalties for either defaulting on monthly payments

or terminating the lease earlier than the scheduled term.

To avoid being on the receiving end of such tried-and-true tricks, educate

yourself about leasing. Get down to the nitty-gritty and understand what

the leasing terms used by dealers mean. Crunch the numbers along with him

and understand how they arrived at the monthly payment figure. Don't sign

anything until you've understood all the terms and your numbers much those

of the dealer. Do not let the dealer pressure you into signing; you are the

one to determine whether the agreement is right for you.

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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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Go Green And Save On Your Lease

(category: Auto-Leasing, Word count: 203)
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Hybrid vehicles' popularity has sharply grown from a couple of thousands

in early 2000 to close to 300, 000 by the end of 2005. The trend is

rapidly catching with the auto-leasing industry with generous tax credits

and incentives on offer if you go green.

Beginning in 2006, businesses and taxpayers who lease, or purchase, an

environmentally-friendly and fuel-efficient vehicle will be eligible to

claim federal income tax credits worth thousands of dollars. Individual

states also offer generous incentives, including hybrid state tax credits,

new High-Occupancy Vehicle (HOV) lanes access and discounted thruway tolls

for alternative-fuelled vehicles.

And that's not all you can save from going green! You can now save on your

parking fees at a number of universities and some auto-insurance companies

are offering insurance discounts for hybrid-vehicle owners nationwide.

If you want to take advantage of these incentives and contribute to energy

conservation then visit HybridCenter.org and complete a personal profile

about your driving needs and habits. You will get in-depth advice on hybrid

models that would make economic sense to you and local, state and federal

incentives available where you live.

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Single Payment Lease

(category: Auto-Leasing, Word count: 218)
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A prepaid lease is a new type of lease which has made its foray into the

market in recent times. In this lease, consumers forego the cycle of lease

payments if they make a large payment at the beginning of the lease.

There are two amounts in a conventional lease that incur charges and

determine your monthly lease payments. First, there is a depreciation

charge which accounts for the value the car loses during the lease term.

Second is a residual amount which is the projected value of the vehicle at

the end of the lease. The sum of these two charges gives the monthly

payments on your lease.The idea behind a pre-paid lease is to eliminate the

finance charges for depreciation and only account for residual value

charges in a single, pre-paid payment at the beginning of the lease.

Single-payment leases are devised with spendthrifts in mind: no cycle of

monthly payments, a new car every two to three years and no interest in

purchasing the vehicle at the end of the lease. You should only consider

this type of lease if you are concerned about not being able to make monthly

payments and have a lot of cash upfront.

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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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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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How To Calculate Your Lease Payment

(category: Auto-Leasing, Word count: 483)
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Understanding how to calculate your monthly lease payment makes it easier

for you to make an informed decision. Yet, most of us shy away from the

"complicated" math on our lease contract, leaving it up to the dealer to

do the payment formula.

Actually, it's not that difficult! Once you understand all the figures

involved in calculating your monthly payments, everything else falls into

place. These key figures are:

MSRP (short for Manufacturer's Suggested Retail Price): This is the list

price of the vehicle or the window sticker price.

Money Factor: This determines the interest rate on your lease. Insist on

your dealer to disclose this rate before entering into a lease.

Lease Term: The number of months the dealer rents the vehicle.

Residual Value: The value of the vehicle at the end of the lease. Again,

you can get this figure from the dealer.

Now, let us calculate a sample lease payment based on a vehicle with an

MSRP (sticker price) value of $25,000 and a money factor of 0.0034 (this is

usually quoted as 3.4%). The scheduled-lease is over 3 years and the

estimated residual percentage is 55%.

The first step is to calculate the residual value of the car. You multiply

the MSRP by the residual percentage:

$20,000 X .55 = $11,000.

The car will be worth $13,750 at the end of the lease, so you'll be using:

$20,000 - $11,000 = $9,000

This amount of $9,000 will be used over a 36 month lease period giving us a

monthly payment of:

$9,000 / 36 = $250.

This is the first part of the monthly payment, called the monthly

depreciation charge.

The second part of the monthly payment, called the money factor payment,

factors the interest charge. It is calculated by adding the MSRP figure to

the residual value and multiplying this by the money factor:

($20,000 + $11,000) * 0.0034 = $105.4

Finally, we get the approximate monthly payment by adding the two figures

together:

$250 + $105.4 = $355.4

To recapitulate, the sample formula looks like this:

1- Monthly Depreciation Charge:

MSRP X Depreciation Percentage = Residual Value

MSRP - Residual Value = Depreciation over lease term

Depreciation over lease term / lease term (number of months in the lease) =

monthly depreciation charge

2- Monthly factor money charge

(MSRP + Residual value) X Money factor = money factor payment

3- Sample Monthly Payment:

depreciation charge + money factor payment = monthly payment

Keep in mind that this is a simplified calculation that does not take into

account taxes, fees, rebates or any other incentives. The calculation gives

you a ballpark figure or a rough idea of what your lease payments for the

vehicle in question should be.

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Leasing Used Cars Explained

(category: Auto-Leasing, Word count: 455)
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Leasing a used vehicle can be an attractive deal in many ways, no least

getting you into that luxury model or SUV, for lower monthly payments than

a brand new one. Be prepared, however, to do some more homework to dissect

a good deal.

As with new car-leasing, your price research should focus on the key

figures that are the initial market value and the estimated residual value

of the used car. This is harder to predict since there is no factory-set

sticker price on used cars, and the residual percentage is very much pegged

to a subjective current retail value. Use different sources to get a rough

idea of the value of the used car: your local dealerships, internet

car-evaluating tools, such as Edmunds.com and Cars.com, to name but a few.

Another way to pin down a good estimate is to compare the lease on your

given car to a lease on a new-car with the same make and model. This should

give you a better picture of the difference between leasing new and going

for used. Just like leasing a new car, used vehicle leasing is more

attractive when residual values depreciate the least. You stand a better

chance of finding a bargain in the high-end, luxury vehicles that keep

their values better as used cars.

Next, you need to check the initial mileage and the overall vehicle

condition. The maximum mileage on a used car should be no more than 12,000

miles a year. A 3-years old car with 50,000 miles on the clock is very

unlikely to make a good used-vehicle lease. Check for signs of excessive

use, like worn seat fabric, worn pedal pads and dirty engine, which might

indicate that the odometer has been rolled back. If the car is not

certified, you need to get it thoroughly inspected. Ask your dealer for a

manufacturer-sponsored certification program or have your car certified by

a qualified mechanic or inspection service.

Most used-car deals don't come with gap coverage. This is a special type

of coverage, normally offered on a new auto-lease, to cover the consumer if

the leased vehicle is lost, stolen or damaged. Typically, auto-insurance

policies cover only what your car is worth at the time of loss, not what

you still owe on the lease. The difference could run into thousands of

dollars. For peace of mind, do not enter into any used-car lease without

gap-coverage. Arrange it separately with either the lease dealer or your

auto-insurance company.

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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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