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Information On Leasing A Car
  What you need to know about car leases and leasing.

 
Q: Do I own the car when leasing?
Q: Is leasing cheaper than buying?
Q: Is leasing a car right for me?
Q: Why do businesses sometimes lease cars instead of buying?
Q: What up-front costs can I expect to pay?
Q: Can I return the car before my lease is up?
Q: Am I responsible for damages to a leased car?
Q: If I damage a leased car, should I repair it?
Q: What mileage restrictions apply to leased cars?
Q: What if I go over the mileage limit on my leased car?
Q: How do I know how many miles I will drive a year?
Q: How does a higher mileage limit affect my lease payments?
Q: What is the typical term of a lease?
Q: What should be my down payment on a leased car?
Q: Can I negotiate the price of a leased car?
Q: What am I obligated to do when turning in a leased car?

  The Top 10 things to know when leasing:
 
1.
What is the price of the car? Negotiate the price if you can.
2. What are the available terms (lengths) for the lease?
3. What are the available mileage limits? You can adjust it to suit your driving habits.
4. What is the penalty cost per mile for going over the mileage limit?
5. How much will the car be worth at the end of your lease (residual/balloon payment)?
6. What condition must the car be in upon return? What is normal wear and tear?
7. How long is the car under warranty?
8. Are you responsible for paying the personal property tax on this car?
9. What are the up-front fees? (Tax, title, registration, down payment etc.)
10. How does adjusting up-front fees, term and mileage affect monthly payments?


  Car leasing question and answer guide:
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Q: Do I own the car when leasing?
A: No, you do not own a leased car. You are however entitled to use it as if you owned it and are responsible for it. You must return it at the end of the lease term in a condition suiting those outlined in your agreement. The company you are financing it through usually owns leased car.

Important:
Although you do not own a leased car, you are required to pay the appropriate personal property taxes in most situations.

Important:
Sometimes overdue parking violations and taxes will be sent to the financing company since they own the car. Don't be surprised to see that they may pay the amount, and charge you a fee for doing so.

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Q: Is leasing cheaper than buying?
A: If you are plan to buy the car at the end of the lease, then its usually not. Leasing affords you lower monthly payments than if you chose to buy that same car. However, if you choose to finance your residual/balloon payment at the end of your lease term, you will most likely pay more than if you had chosen to buy.
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Q: Is leasing a car right for me?
A: The answer to this questions actually depends on the answers to the following questions.
Do you like to drive a newer car that is under warranty?
Do you typically trade in a car every 2-4 years?
Do you drive less than 15,000 miles a year?
Are you more concerned about lower monthly payments than owning a car?

If you answered YES to all of the above then leasing may be right for you. When you lease a car, it is typically under warranty or partial warranty for the entire term of your lease. Most lease terms run 2-4 years in which you will return the car and owe nothing (barring any damages to the car). Most leased cars have mileage restrictions set around 15,000 miles per year. If you drive at or below this range yearly, then you should not have to worry about any mileage charges upon turn in. If you trade-in your car every 2-4 years, then you probably are breaking even anyway. You would most likely be better off leasing and having a significantly lower monthly payment.

You may even lease with all intentions of buying at the end of the lease. This affords you lower monthly payments during the beginning of your loan. You may pay a little more in the long run, but you may not be able to afford to buy the car outright.
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Q: Why do businesses sometimes lease cars instead of buying?
A: Most businesses can write off a lease as a business expense without having to claim those cars as assets, a big plus around tax time. Additionally, the car will usually have a lot of miles put on it. It helps to have a newer dependable car that is most likely under warranty.
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Q: What up-front costs can I expect to pay?
A: You will most likely encounter the same fees when leasing as if purchasing. Such fees may include: first month's payment, taxes, title, tags/registration and often a security deposit. In certain circumstances you can pay an additional amount at the time of purchase in order to reduce your monthly payments.
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Q: Can I return the car before my lease is up?
A: You can return the car, but there is usually an early termination fee that you will have to pay. These fees are usually significant enough to discourage customers from doing this.
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Q: Am I responsible for damages to a leased car?
A: Your lease agreement will outline the condition that the car is expected to be in once the lease term is up. Typically, normal wear and tear is acceptable. Things such as minor interior stains, minor exterior nicks and scratches and anything resulting from normal use of the car. You will also be held responsible, if your tires are not in normal condition when returned. Most people have to replace their tires during a lease, especially on SUVs and Trucks.
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Q: If I damage a leased car, should I repair it before I turn it in?
A: Major damages should be repaired before returning the lease is up. The leasing company will typically charge you far more for the repairs than you could get it done for yourself. They may factor in service fees, or even estimate what it would cost to bring it back to perfect condition.
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Q: What mileage restrictions apply to leased cars?
A: Most lease packages will offer 10,000 to 15,000 miles a year to be put on the car. This means that at 15,000 miles a year, you should have no more than 45,000 miles at the end of a 3- year lease.
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Q: What if I go over the mileage limit on my leased car?
A: Your lease agreement will have a cost per mile over your limit that you must pay. This usually ranges from .10 to .21 cents a mile. Take a look at the following example:

     45,000-mile limit
     48,500 miles on the returned car
     .10 cent per mile overage charge


     48,500 - 45,000 = 3,500 x .10 = $350    (You would be required to pay $350 at turn-in)


Important: Make sure to note the mileage on the car when you purchase it. This can be deducted from your overall mileage at the end of your lease. It should be added to your contract at the time of purchase.
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Q: How do I know how many miles I will drive a year?
A: If you have a previous car, estimate the mileage that you have put on it over a given time. If not, 12,000 miles a year is average for those who do more than just drive a couple miles to work everyday. If you travel frequently, you should bump the mileage limit up to 15,000.
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Q: How does a higher mileage limit affect my lease payments?
A: Higher mileage limits usually increase the price, but it better to pay a little more each month than to be stuck with a huge overage bill at the end of your lease term. You may also worry about your mileage a lot during your last year if you are coming close to your limit. Some people go as far as to stop driving their car once they reach their limit, even with months left on their lease.
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Q: What is the typical term of a lease?
A: Typically, lease terms run 2-4 years. Sometimes you are even able to extend the term a few months to lower your monthly payments. You will pay more, but luxury of more manageable monthly payments may be worth it.
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Q: What are my "up-front fees" on a leased car?
A: The more you put down, the lower your monthly payments will be. Although you must remember that you will not own the car at the end of the lease. Putting down $2,000 instead of $1,000 may reduce your monthly payments, but you will not see that money if you return the car. Compare the total cost savings of putting more money down and determine if having that $1000 in you bank account is better than saving $20 a month.
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Q: Can I negotiate the price of a leased car?
A: Most people think that if you are leasing, the lower monthly payments are enough incentive. This is not always the case. You may negotiate the overall price of a leased car. This may help you out if you decide to purchase the car at the end of the lease.
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Q: What am I obligated to do when turning on a leased car?
A: You must provide the car to the dealer at the appropriate date specified on the lease agreement. You must provide it to them in the condition specified in the agreement. You will be expected to pay for excess wear and tear, damage, and overage in the total mileage limit.
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