Home | Finance | Leasing
In the past figuring out how to finance your dream car was simple - you could take out a personal loan or you could take whatever finance package your dealer offered. It's different now. There are lots of ways in which you can finance your purchase. Currently the most popular is to take out an auto lease deal. An auto lease is a long-term rental agreement - terms typically start at 24 months with 36 and 48 months much more common. Auto lease agreements do have a few twists to watch out for though. With an auto lease you never own the car. The lease company purchases the vehicle. You lease it from the leasing company. At the end of the lease agreement you simply return the vehicle. As long as the vehicle is in good condition and hasn't exceeded your mileage limits that's all there is to it. As the lease company gets the car back at the end of the lease they will be able to sell it at the pervading market value. The charges to you are based on the difference in purchase price and this residual value. Lease companies pay very close attention to the prices for second hand vehicles to ensure that this residual value is as accurate as possible. An example may help. The purchase price is $30,000. The terms of the lease are for 24 months (unusually short period) and you can drive up to 15,000 miles each 12 months. The end of lease selling price is assessed at $18,000. So the deal will cost the lease company $12,000 - $30,000 less the selling price of $18,000. Your auto leasing finance options are based on the $12,000 that the leasing company is covering. Even with the lease company's administration and finance costs you are monthly charges are going to be a lot less than if you were financing the whole purchase price. Not only do you get lower monthly payments but your upfront deposit is certain to be lower too. Remember that residual value mentioned earlier? Well that gets interesting at the end of the lease period. Auto lease companies usually set this at the low end of expectations. If you stay within the terms of your lease the chances are that the car will be worth more than the residual value. This means you have 3 choices: 1. Buy the car for the agreed residual value 2. You can trade the vehicle in and use the difference between the current market value and the residual value as the deposit on your next lease 3. Give the keys back and get on with your life Most people seem to take the trade in and enter into another lease deal. There are downsides to auto leasing. In the long run it will always be more expensive than buying through an auto loan. Auto leases work really well for people with stable lives. It is virtually impossible to get out of a lease deal early and excess mileage charges can be heavy. For the right people auto leasing is a great way to be able to drive a new car every 3 years or so.
Article Source: http://www.articlebase.info
Save hundreds of dollars on your next new auto. Auto leasing lets you drive a new car for less than you might think. For help and information on obtaining the auto loan or auto lease that is right for you visit www.autoloan.jklblog.com
Please Rate this Article
5 out of 54 out of 53 out of 52 out of 51 out of 5
Not yet Rated
