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Taking A Look At Auto Leasing

Taking A Look At Auto Leasing

There are many times when auto leasing can make sense

. As a means of obtaining a new vehicle at a far greater frequency than is usually possible when people finance an auto purchase, leasing can be particularly attractive. Also, leases on autos usually run for agreed-upon lengths of time and their popularity rises and falls somewhat in sync with the relative strength of the general economy, which is a point worth keeping in mind.

There are a number of differences between a lease and a purchase of an automobile, including that a person leasing a vehicle is contracting for the use of the auto only for a period of time. Usually, at the expiration of that "lease period, " the vehicle will be turned back in to the leasing company, be it a captive finance arm of an auto manufacturer or an independent organization.

For people who like the idea of driving a new vehicle more often than would be the case when financing the purchase of a vehicle, leasing can be quite attractive. In good economic times, a lease on a vehicle can often mean a lower monthly payment with lower annual costs than when purchasing an automobile. The downside is that a person isn't building any equity ownership in the vehicle, of course.

Many leasing experts, though, say that financing the purchase of an automobile is somewhat overrated and not the best use of available capital. Given that an automobile suffers a great deal of depreciation in the first few years, when the vehicle is at its newest and most attractive, it's easy to see why leasing can be the better alternative. Often, in a purchase, a person may end up owing a great deal more on the vehicle than it's worth, as well.Taking A Look At Auto Leasing


With leasing, a person is almost paying rent on a vehicle. This can help avoid the problem of depreciation that purchasing a vehicle can often create and it leaves more usable capital in a person's wallet rather than in a vehicle that's losing value faster than it can be paid off. Leasing of a motor vehicle can sometimes seem like a complicated exercise, but it actually isn't. Just understand a few concepts before looking a lease, first.Taking A Look At Auto Leasing


Normally, a prospective lessee (the person who'll be leasing a vehicle) has to cover a few upfront fees, which are mainly referred to as "acquisition costs." A typical cost is the down payment, which is usually the largest of the fees. On an expensive sport sedan, it could run anywhere from $1500 to $5000, depending on such factors as lease term and the popularity of the vehicle.

After a down payment, a person my have to include the first month's payment, as well. Tax, title and license fees, though, are included in the monthly payment figure. Given this, it's quite often the case that a person can get into much more vehicle than he could afford to purchase and for a lower upfront cost in many instances. Some leases are even "sign and drive, " meaning the lessor won't require much more than a signature to get the lease going.

Auto leasing usually is more popular and common in flush economies than when an economy is struggling a bit because lessors have looser credit standards in good times, so keep that in mind. When they're available, they can give to a person the ability to drive a much more expensive car than would normally be possible when a person finances the purchase of an automobile. This is because a monthly lease payment tends to be lower, making leasing a perennially-popular form of auto acquisition.

by: Jack Hanley
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