Is a new car, truck, or SUV at the top of
your wish list this holiday season? There's certainly no harm
in picking up a little something for yourself. Now, besides
deciding on which brand, style, and color you would like, you may also
be stuck on how exactly you want to best pay for your new
sleigh.
I would definitely agree that one
of the
most common questions I hear from customers is, "Should I buy or
lease?" Now, I always have different answers for each person
based on their specific wants and needs so it is pretty difficult to
give a clear cut answer for the masses. This week, I stumbled
across the following article from Edmunds.com. Edmunds is a
fantastic source for auto information and this week they have tackled
the lease or not to lease dilemma.
The
following are the 10 Steps on Leasing a New Car according to
Edmunds. Now, it looks a bit lengthy, but I promise it is good
information and worth the read.
Just
jumping ahead..one of the steps deals with looking for lease specials at
local dealers. Here at our nine
Checkered Flag
locations in Va Beach and Norfolk, there are always lease
specials. Always. The absolute easiest way to
navigate through different
Checkered
Flag brands for current lease specials is to choose the
Internet Specials link on
CheckeredFlag.com
homepage, then choose a brand from the drop down list. You
can check every Checkered Flag brand including
Checkered
Flag Honda, Toyota, BMW, smart, MINI, Jaguar, Porsche, Audi,
and
Checkered
Flag Hyundai and VW. If you do not see the
particular vehicle you were hunting for on the internet specials list,
don't fret. Simply call (757)490-1111 and let us know which
vehicle you would like leasing special pricing for. We can
take care of many of the details before you even visit the
store! Keep in mind, though, that, as the article states, the
best way to get the best deal is to visit Checkered Flag in
person.
Article from [
Edmunds.com]
Article edited slightly to exclude
advertisement.
Step 1: How leasing
works.
Leasing a car is like renting a car - but for a longer
time period. Unlike buying, you never actually own the car and you have
to give it back at the end of the lease. Leasing became popular in the
1990s because cars became too expensive to buy for many people. Leasing
allows a person to drive a brand-new car and make lower monthly
payments, thus making the "new-car experience" more accessible to more
people. Finally, leasing can offer tax breaks for certain
occupations.
Remember that, while leasing might not
save you money in the long run, it could fit more easily into your
budget on a monthly basis. Also keep in mind that some people find
leasing to be confusing since many of the terms are different. We'll do
our best to quickly and clearly explain how to make leasing work for you
in the following steps.
Step 2: Checking incentives
and special lease deals.
Car manufacturers commonly offer lease
specials. This is a good way to shop for a leased car because it can
save you even more money. However, the specials might have hidden costs
that are not clearly identified in the lease ad. You should always check
to see if the promised monthly payment includes sales tax and fees.
Also, does the advertised lease require a large down payment (sometimes
called a "cap reduction payment" or "cap cost reduction"), bank fees and
a security deposit? What about the annual mileage limit? These are
questions you want answered long before you're closing a lease
deal.
Step 3: How long should your lease
be?
It is possible to lease cars for two, three, four or five
years. However, the three-year lease is the best choice for most people.
The majority of carmakers offer three-year bumper-to-bumper warranties.
If your lease is for three years you will always be under warranty
without paying extra for an extended service contract. Furthermore, a
car really begins to show its age at about three years - right at the
time the lease is expiring. Remember, one of the reasons for leasing is
to drive a new, or nearly new, vehicle on a constant basis. Why would
you lease for five years and be forced to deal with extended warranty
fees and higher maintenance costs? If paying for these items doesn't
bother you, maybe you should consider buying the
car.
Of course, everyone wants a low lease payment,
and extending the length of the lease will drop the monthly cost. But
extending the lease means you're investing more and more money into a
vehicle that will never be yours. It's better to shop aggressively for a
competitive lease deal and keep the length of the contract to three
years.
Step 4: Estimating your lease
payments.
A lease payment is calculated from many different
numbers and can be difficult to understand. However, you should attempt
to estimate your own lease payment before you go shopping to avoid
paying too much. In the old days (like, five years ago), this meant an
hour or two with a calculator. Now, the process has been streamlined by
the Internet.
Step 5: Finding the exact car to
lease.
By this point it should be obvious which car you want to
lease. This means you know the make, model, trim level, options and
color. The more flexible you can be, the better the lease deal you will
be able to make. For example, a shopper might be very firm about the
make, model and trim level, but could accept a variety of options and
colors. If another shopper definitely wants hard-to-find options and a
specific color, it will be more difficult to make a great deal. Why? You
have no leverage as a negotiator. You have to pay the dealer's lease
rate or try to locate another identical vehicle.
In
any case, locate the exact car you want by sending e-mails to the
Internet managers at your local dealership. In some cases, you
may have to follow up with a phone call. Say something like: "I want to
lease a
2011
Hyundai Sonata for three years. I'm not too fussy about the
color but I don't want black or white. I want ABS and side airbags. What
do you have on your lot? And can you give me a lease payment?" Often
the salesperson will have to check his inventory and call you back.
As you make phone calls and exchange e-mails with
the dealership's Internet manager, take careful notes about the lease
quotes you receive. Now, compare the quotes you get to your
own calculated lease payments. Record the information you receive about
each car you locate, including the color, options and the dealership
name. This will save time as you continue to shop for a good leased
car.
Step 6: Test driving the car
salesman
As you call dealerships to locate the exact car you
want to buy, you can also test drive the car salesman. In other words,
you can determine if this is a person you want to do business with. It's
a good idea to consider this issue ahead of time, before you get to the
deal-making phase of the lease process.
To evaluate
the salesperson, ask yourself if you feel comfortable dealing with him.
Is he impatient and pushy? Or relaxed and open? When you asked him about
a specific car's availability, did he respond to your needs? Or did he
try to steer you toward another car simply because his dealership has
too many of that model in stock? Does he return your phone calls? Does
he answer your questions about leasing in a straightforward manner? Or
is he evasive and confusing?
By considering these
issues, you should have a sense of whether you want to lease a car with
this salesperson's assistance. If you feel comfortable with the
individual when researching by phone, and if the dealership has the car
you're interested in, set up a time to test drive the car. Preferably,
when the dealership will not be very busy, such as on a weekday morning.
Before heading to the car lot, review all your notes and make sure you
bring your car-buying folder. This might include your checkbook,
registration and proof of insurance. Keep in mind that you're bringing
these items so you'll be ready to lease a car if you get a fair deal.
Don't feel obligated to lease a car simply because you have all the
necessary paperwork with you.
Step 7: The final test
drive.
When you arrive on the lot you will want to take a
careful look at the car you are planning to lease. You should also drive
the car one more time. You might have driven several other cars, and
need to refresh your memory. If you specified several options - such as
side airbags or ABS - check the window sticker to make sure they are on
the car you are getting ready to lease.
If everything
checks out, it's time to make a deal for your lowest lease
payment.
Step 8: How to negotiate a lease
payment.
Negotiations can be handled several ways. If the car
is widely available, contact your local dealerships and solicit bids (as
described in Step 5). Take the lowest bidder, call the other dealers,
and see if they can beat that price. If not, you are at rock
bottom.
If the car is harder to find, and you are on
the lot, you can still refer to the lease payments you calculated at
home. If the lease quote from your salesperson matches your estimate,
you're probably getting a fair deal, but make sure the numbers and terms
match your calculations. Be especially sure to check the down payment
(we recommend a zero down payment), the term of the loan (we recommend
three years), the monthly payment and the annual mileage
allowance.
In the past, Edmunds.com recommended that
the best way to get a good lease payment was to negotiate the lowest
selling price for the car (using True Market Value pricing as a guide).
Once that was set, you would get the salesperson to draw up a lease
payment based on that figure. The thinking was that if the salesperson
knew you were leasing, he would focus on the monthly payment while
ignoring the negotiated price. He might even try to confuse you with
leasing jargon. But the reality is, if you're happy with the down
payment, monthly payment and mileage allowance, the purchase price of
the vehicle is probably right. Keep in mind, however, that if you think
you will want to buy the vehicle at the end of the lease, you should
also check the "residual value" to make sure it is a realistic
figure.
Whichever method you choose to negotiate, it
is a good idea to ask the salesperson to fax you a worksheet, detailing
all the costs before you go to the dealership. This will allow you to
review the figures in a relaxed environment. Compare the numbers to
those you have calculated and the True Market Value prices of cars
listed on Edmunds.com.
Step 9: Reviewing and signing
the paperwork.
At the dealership, you will be presented with
the lease contract for your new car and a dizzying array of forms to
sign. This might be done by the Internet salesperson you have been
dealing with, or it could be done in a separate office by the finance
and insurance (F&I) manager. If you have already seen a
worksheet for the lease deal you've made, the contract should be a
formality. Make sure the numbers match the worksheet and that no
additional charges or fees have been inserted. You will also be asked to
sign various forms that register the new car for you. Understand what
you are signing and what it means. Ask questions if you don't
understand, and don't ever feel like you have to hurry. Leasing a car is
a serious commitment and it's the F&I manager's job to ensure
you understand the documents involved. Remember, once you have signed
there is no going back.
Most lease cars are based on
the owner driving 12,000 miles a year. If you drive farther than this,
you are charged from 10 to 15 cents for each mile over the limit. If you
think you are going to drive farther than the allowed mileage, you may
be able to buy extra miles up front. Usually, you can buy extra miles at
five cents per mile and have this rolled into your lease payment. This
pay-as-you-go approach prevents any unpleasant surprises at the end of
the lease.
One last thing, check to make sure the
contract you are buying includes "gap insurance," which is recommended
when leasing. If your leased car is stolen or totaled in an accident,
there might be a gap between what your insurance company will pay you
for the loss and the amount you now must pay to the leasing company. If
you take out gap insurance (it is included in some lease contracts),
this will cover you for this loss.
Step 10:
Successfully managing your leased vehicle.
As you drive your
leased vehicle, you need to remember that the car will have to be
returned in good condition. Have all the scheduled maintenance performed
at an authorized dealer and keep your eye on the odometer to avoid
exceeding the mileage limit.
When the time approaches
to end the lease, you will have several alternatives. You can turn it
back in and lease a new vehicle. You can buy the car for the residual
amount stated in your contract and continue driving it. In some cases,
you can even extend your lease term on a month-to-month basis while you
decide what your best course of action will be. Whatever you decide to
do, take the time to consider each avenue carefully. Check current
market values of the cars that interest you (using Edmunds.com True
Market Value prices) and shop for lease deals from
manufacturers.
You've reached the end of the final
step. Now, it's time to go out and put your knowledge into action. Just
remember, the time you take to research your leasing decision will pay
dividends over the years. You'll not only be driving a car that suits
your needs, but you'll be saving money in the process. That's a big
payoff for a little bit of work.
