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Previous PageLook Before You Leap..I mean Lease!
To lease or to buy? That's the choice you face when mulling over makes
and models and deciding which car deal best meets your needs. Leasing a
car is not the same as buying one. When you buy, you own the car. When
you lease, you pay to drive someone else's vehicle. Leasing can involve
lower monthly payments than a loan. However, at lease end, you will
have no ownership or equity in the car. Many dealers and other lessors
offer vehicle leases. Before you decide whether to lease or buy, the
Federal Trade Commission (FTC) reminds you: don't be dazzled by
so-called deals. Ask questions, nail down the details, read the fine
print, and shop around.
If you're thinking of leasing, the FTC offers these shopping tips:
1.
Shop as if you're buying a car. Negotiate all the lease terms,
including the price of the vehicle. Lowering the lease price will help
reduce your monthly payments. Get all the terms in writing.
2. Learn the language of leasing:
- * In a closed-end lease, you return the car at the end of the lease and "walk away," but you're still usually responsible for certain end-of-lease charges, such as excess mileage, wear and tear, and disposition.
- * In an open-end lease, you pay the difference between the value stated in your contract and the lessor's appraised value at the end of the lease.
- * Lease inception fees are payments you must make when the lease starts, and may include a down payment, security deposit, acquisition fee, first month's payment, taxes and title fees. Ask for a list of all charges due at lease inception. You may be able to negotiate some or all of the terms.
- * The capitalized cost is the price of the car for leasing purposes plus taxes and extra charges like service contracts and registration fees.
- * The capitalized cost reduction is similar to a down payment. If you're trading in a car, make sure the dealer applies the trade-in value to the price your lease is based on. The trade-in credit may reduce your down payment or monthly payments.
3. Ask whether extra charges will be assessed for excessive mileage,
wear and tear, disposition and early termination, and find out the
amount of these charges. Most leases allow you to drive 12,000 to
15,000 a year; if you put on more miles, expect a charge of 10 to 25
cents for each additional mile. You may think the ding in the door or
coffee stains on the upholstery are normal wear and tear; to the
lessor, it may be significant damage. Check out penalties for an early
return; expect to pay a substantial charge if you give the car up
before the end of your lease.
4. Make sure the manufacturer's warranty covers the entire lease term and the number of miles you're likely to drive.
5.
Consider "gap insurance" to cover the difference - sometimes thousands
of dollars - between what you owe on the lease and what the car is
worth if it's stolen or totaled in an accident.
6. Before you
sign the deal, take a copy of the contract home and review it carefully
away from any dealer pressure. Be alert for any charges that were not
disclosed at the dealership, like conveyance, disposition, and
preparation fees.
7. Federal law requires lessors to provide
lease cost information before you sign the lease. Take a copy of the
attached form to the dealer and ask them to complete it. Some dealers
may be willing to provide the information during your shopping process.
If the dealer declines, consider shopping elsewhere.
For more information about buying or leasing a car, visit the FTC's Web site at www.ftc.gov/autos.
The
FTC works for the consumer to prevent fraudulent, deceptive and unfair
business practices in the marketplace and to provide information to
help consumers spot, stop and avoid them. To file a complaint or to get
free information on consumer issues, visit www.ftc.gov or call
toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The
FTC enters Internet, telemarketing, identity theft and other
fraud-related complaints into Consumer Sentinel, a secure, online
database available to hundreds of civil and criminal law enforcement
agencies in the U.S. and abroad.
Jody DeVere
President
www.askpatty.com
www.carblabber.com
