On the up side, a new car lease
is almost certainly going to have lower monthly payments that a
purchase, compared with the same amount of money out of pocket at the
time of signing. You can usually get a good deal on a car lease for less
than a couple thousand out of pocket. The monthly payment is going to
be determined by what the estimated resale value of the car will be at
the end of the lease. So a car with poor resale value is going to have
higher monthly payments than a car with a much better average resale
value.
But on the down side, you are
still responsible for the maintenance of your leased car - gas, oil
changes, tires, tune-ups, insurance, and all the other things that
normally accompany car ownership, but you are NOT building any equity in
the car. In other words, you are in effect RENTING the car, except that
you also have the responsibility for the maintenance of it.
Not all new car leases are
created equally. You should definitely do your homework as far as what
leasing programs are available, what they include and exclude, and most
of all, what is it going to cost you. One big thing in almost all car
leases is a mileage cap, where a typically mileage cap says that you
will put no more than 12,000 miles a year on the car. So at the end of a
three year lease, you can have no more than 36,000 miles on the car.
You do not get any extra brownie points if there are fewer miles on it,
but if there are MORE miles than that on it, you will pay through the
nose for it, something like 30 cents per mile. So in this example, at
the end of the lease you have 40,000 miles on it, it is going to cost
you an additional $1200 to turn in the car. Ouch!
Over the course of a lease, you
may want to terminate the lease early. If this might even be a remote
possibility, know what your options are up front. In most cases, there
is an early termination fee. Sometimes if you leased your car from a
large dealership, they will allow an early termination fee without
penalty if you are within about 6 months of the end of the lease, but
only if you sign another agreement on another new car lease.
