Benefits of Leasing
July 23, 2008
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.
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Auto Leasing Scams
July 23, 2008
Car-leasing has been lauded as a more attractive alternative to buying, offering in the process the flexibility to drive a new car for less. The reality, however, is that leasing is an option that is fraught with many pitfalls for the average customer. Leasing regulation does not require as much disclosure as buying a vehicle. This has given rise to many leasing scams that trick the customer into believing they are into a good deal when, in effect, all he is getting is a rough deal on the dealer’s terms.
Here we look at some of these common scams and how to avoid them
Artificially low interest rates:
Some dealers quote a lower interest rate when in reality it’s much higher. They do this by either purposefully quoting the money factor as the interest rate or calculating the loan without amortizing some closing fees, like the security deposit, into the loan lease. Take the money factor for example: this is typically expressed as a four decimal digit, something like 0.004. Some dealers quote this as a 4% interest rate when in fact you need to multiply it by 24 to get a rough idea of the interest rate on your loan. In this example, the interest rate is a much higher 9.6% than the “quoted” rate of 4%. Make sure you crunch the numbers and understand the formula they use to calculate their interest rate. Look out for any fees not factored into the calculation. If you are not satisfied, do not enter into the lease agreement.
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Auto Insurance and Leasing
July 23, 2008
When leasing a car, it’s easier to stick with the same company for your auto insurance. What you don’t know, however, is that you may end up paying too much for your coverage and it’s better to look elsewhere for lower rates.
When you lease, the vehicle that you will drive belongs to the leasing company. They want to make sure that their investment is covered in the event the vehicle gets damaged, totalled or stolen. They typically want to get covered for the difference between what your auto-insurer pays and your outstanding leasing obligations at the time of the accident or damage. This is called GAP, short for Guaranteed Auto Protection, and is usually included in the leasing contract. If your leasing company is called BMW Financial Services, Chrysler Financial or any other finance division of an automaker, then chances are your GAP insurance will be offered by the same lease company.
You are under no obligation to accept GAP insurance included as part of your lease agreement. Why pay an insurance premium if you could get the same coverage for a lower price? Invest some time shopping by comparing quotes from other insurance companies, including your existing one. Ask for discounts that you already qualify for and adjust your coverage accordingly.
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