Leasing a Car

Why Lease A Car? I like to have a new car every 2-3 years. I like to have a new car every 2-3 years. Should you buy depreciable assets? Should you buy depreciable assets? Low upfront costs Low upfront costs Lower monthly payments Lower monthly payments Lower Taxes Lower Taxes

Basics of Leasing A Car? When you buy a car you pay for the entire cost of a vehicle When you buy a car you pay for the entire cost of a vehicle When you lease you pay a portion of car’s cost. When you lease you pay a portion of car’s cost. Lease usually requires money upfront (downpayment). In the neighborhood of $1,000 - $2,000. Lease usually requires money upfront (downpayment). In the neighborhood of $1,000 - $2,000.

Basics of Leasing A Car? Lease payments are made up of 2 parts: Lease payments are made up of 2 parts: Depreciation ChargeDepreciation Charge Finance ChargeFinance Charge The amount that you are is leasing is determined by: The amount that you are is leasing is determined by: Cap Costs – The value of the car todayCap Costs – The value of the car today Residual Value – What the car is worth at the end of the lease contract.Residual Value – What the car is worth at the end of the lease contract. You are leasing the (Cap Cost – Residual Value)You are leasing the (Cap Cost – Residual Value) How can you lower your leased amount?How can you lower your leased amount? Lease is usually for 36 months Lease is usually for 36 months Keep it at 36 months so your car will always be under warrantyKeep it at 36 months so your car will always be under warranty

Basics of Leasing A Car? Extra costs: Extra costs: Mileage Excess – Typically the dealer lets you drive 12,000 a year. After that, you get charged for every mile over. Usually 20 – 25 cents a mile.Mileage Excess – Typically the dealer lets you drive 12,000 a year. After that, you get charged for every mile over. Usually 20 – 25 cents a mile. Gap Coverage – in case your car is stolen or destroyed. This is good to have.Gap Coverage – in case your car is stolen or destroyed. This is good to have. Maintenance Expenses – Charged based on what the dealer charges to fix something.Maintenance Expenses – Charged based on what the dealer charges to fix something.

Basics of Leasing A Car? o Benefits of Buying a Car: oOnce the loan is paid off, your car is much cheaper. You now have equity in your car. oWith a lease, you always have a monthly payment. oMany people want to own something and not always be borrowing. oIt is always cheaper buying a car if you hold it longer than 5 years. oExperts say you should plan on owning a car for ten years.