|
| Leasing a Car | |||
The term leasing a car is used to refer to one methods by which an automobile may be financed. Other methods including purchasing with cash, or purchasing with a car loan. Leasing a car is always less expensive than buying with a loan when looking at monthly payments. The reason is that lease payments only pay for a vehicle's depreciated value, not the entire purchase value. For people who only drive an average number of miles and take proper care of their vehicles, leasing can be a good financing alternative. Most cars are leased for a term of 24 months or more and are then returned to the lease company, or purchased, at lease-end. Leasing for a longer term than the length of the vehicle's general warranty is not a good idea. Doing so exposes the customer to having to pay for expensive repairs after the warranty has expired. Lease payments serve to compensate the lease company for the depreciation in value of the automobile during the time it is being driven. The lease company will also assess a monthly finance charge that is similar to interest on a loan. This compensates the company for the use of their money that is tied up in the purchase of the automobile from a dealer. Taxes, fees, maintenance, and insurance are all the responsibility of the leasing customer, the lessee. Leasing a car means the customer is responsible for excessive damage or mileage that is incurred during the lease period. The long-term cost of leasing is usually higher than buying with a loan. Even though monthly payments are lower, it doesn't take rocket science to figure out that leasing a new car every two or three years is more expensive in the long term than buying one car and keeping it until the wheels fall off. For more information,
see: The Lease Guide
Comments and questions should be directed
to
. |
Return to