May 1, 2010

Why are car leasing deals better than renting a car? What does it mean to lease a new car? Essentially, leasing is the same as renting. The ultimate way to decide on whether to buy or lease, will come from what you want over the next few years. Most likely you will lease/rent a car for 2-6 years and then have the option of buying the car or giving it back to the dealer. There is no cut and dry choice when determining whether leasing or buying is the better choice. Your economic situation will play the largest role in your lease versus buy decision. Calculate the difference between buying and leasing. It may become boring to drive and watch other new car models and brands come out, it could be tempting for someone who wants a change. When you have the option of getting into a car and know that it is just for a short time, you might feel better about the purchase. Why do leases have lower monthly payments than loans? When you take out a loan to purchase a car, you are paying the entire purchase price plus interest over a fixed period of time. When you lease a car, you are paying the difference between the purchase price and the projected residual value and you only pay interest on that amount. Example: You’ve negotiated and determined the price for a Toyota car lease to be $20,000. If you want to lease the car for three years, the dealer will determine what the car’s value will be after the three years of depreciation. Let’s say that after three years the car is estimated to be $11,000. Basically, you will be paying $9,000 (plus interest) over three years....