Let’s take a look into the world of car leasing and get you some good car lease information.

At first glance, leasing a car may be a tempting proposition. Little money down, lower monthly payments, and getting more car for the money.

Certainly all good reasons to take a closer look at leasing a car.

Leasing popularity comes and goes. Manufacturers really drive the popularity of leasing with the incentives they offer. Generally speaking you’ll find that leasing is the antithesis of high interest rates. When the interest rate market is up thus making the longer term financing of buying a car more costly then leasing will become more attractive.

The opposite is true when interest rates are at a lower level.

If your not familiar with automobile leasing, I usually attempt to explain it this way. It’s like paying for only the slices of pizza you eat instead of buying the whole pie.

What is left of the pizza that you don’t eat in leasing terminology is known as the residual value of the pizza…… er …. car.

So…. in a lease you are charged for the amount of car you actually use.

The residual value of the car is the projection of the car’s worth at the end of the leasing period.

There is no question that leasing has some advantages. Leasing is basically for the type of person that has come to the realization that they like the all the amenities and advantages of driving a newer car and that a monthly car payment is just a natural part of their budget for the foreseeable future.

For this person, with a monthly car payment as a given, they simply want to get as much car as they can for their monthly payment.

Car Leases:

• You usually don’t have to come up with a large down payment to get to a reasonable monthly car lease payment.
• Your monthly payments will be lower with leasing a car. For example, when you lease your $20,000 car and at the end of the lease the car is still worth say….. $8,000…. and buy the way it’s not yours.
• But, it does mean that you didn’t have to pay for the whole car. Only $12,000 of it.
• Which means your payments for the term of the lease would be based on $12,000 instead of the $20,000. In this example the $8,000 that the car is worth at the end of the lease is known as the residual value (or having a residual value of 40%).
• So, vehicles with higher residual values will probably net you lower monthly payments.
• At the end of the lease you can walk away and let the leasing company worry about reselling the car.

At this point you may be wondering why, with all these advantages to leasing why would anyone purchase a car? Very little money down, lower monthly payments, no reselling hassles, all are nice advantages, but they aren’t exactly free.

All leases come with a mileage restriction, so you don’t have the ability to enjoy unlimited travel in your car without some serious mileage fees tacked on at the end of the lease.

Be sure you know the mileage restriction and the per mile charges for any mileage over the allowance.

Also, be sure to make a call to your insurance agent before you lease to make sure you know exactly what lease type insurance coverage is going to cost you. It could be quite higher than what you are used to.

As a rule, leasing a car is more expensive than buying a car from a pure cost perspective, and at the end of the lease, you have nothing to show for all those monthly payments you have been making.

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