CCC057: Help, I'm in an Auto Lease!
Today, I will go through articles I found on the web to help listeners determine the best way to get out of an auto lease. US News and World Report: Buying vs. Leasing Benefits of Leasing a Car Leasing a car is similar to financing the purchase of the car in many ways, but there are some key differences. You might be able to get more car for less money by leasing. That’s because a car loan is based on the full price of a new car, while a lease is based on only a percentage of the car’s price. For example, on a $30,000 car, you’d finance the entire $30,000 purchase price with a car loan. With a car lease, you only pay the difference between the car’s price and what it’s expected to be worth at the end of the lease, which is a car’s residual value. So if the car’s residual value is 55 percent after three years, for example, that means the $30,000 car would be worth $16,500 at the end of the lease. You’d make lease payments on the remaining $13,500 and not the full $30,000. http://usnews.rankingsandreviews.com/cars-trucks/Buying_vs_Leasing/ New York Times: Auto Leases Entice, but They’re Still Costly Which is best new purchase, new lease, or used? So let’s start with the hard numbers. Mr. Reed looked at three ways you could acquire a four-door Honda Accord EX: buying a new 2014 model, leasing the same 2014 car, or buying a used 2011 Accord with 36,000 miles. (Many people in the New York area are paying about $28,211 for the new car, including tax, title and registration.) The analysis looked at the cost over six years, since the average person owns a car for that long, and it incorporated typical buying patterns: the new Accord is purchased with a five-year loan, the used car is financed with a four-year loan, and the person who is leasing must take out two consecutive 36-month leases. (The rest of the assumptions are detailed on the accompanying chart. http://www.nytimes.com/interactive/2013/09/21/your-money/To-Buy-or-to-Lease.html?ref=your-money ) Click to Listen [powerpress] Leasing initially seems to be the cheapest route when you look at total out-of-pocket expenses: It costs $5,244 less than buying new. (Buying a used car is still the most economical. You save $5,277 compared with leasing, and it’s about a whopping $10,500 less than buying new.) But when you account for the teensy fact that you don’t own anything at the end of those six years, the calculus changes. If you had bought the car new, it would still be worth about $11,000, according to Edmunds.com’s calculators. The used Accord would be worth around $5,000. So after you factor in that equity, leasing costs $5,756 more than buying a new car and $10,277 more than buying used. (Buying new costs $4,521 more than buying used.) Leasing is the loser across the board. Leases Most Costly? “If you asked me what is the most expensive way to get a car, the answer would be: You only want to own it during its period of greatest depreciation and then move to another new vehicle,” said Jeff Bartlett, deputy automotive editor at Consumer Reports. “Well, that’s what leasing is.” http://www.nytimes.com/2013/09/21/your-money/car-leases-grow-more-enticing-but-no-less-expensive.html?pagewanted=all&_r=0 Auto Finance News: Average Auto Loans and Leasing on the Rise in 3Q, Experian Says How Popular is leasing in Q3 2014? Experian also found that leasing accounted for 29.1% of all new vehicle financing in 3Q, up 7.1% from a year ago, while 73-to-84 month new vehicle loans grew by 23.7% last quarter, compared with 3Q 2013. Used loans in the same range also grew, up 18% from a year ago. 51.8% of all new auto sales http://www.autofinancenews.net/average-auto-loans-and-leasing-on-the-rise-in-3q-experian-says/ JD Power: How To End Your Lease Early 1) Return the vehicle to the dealership. This is a traditional lease termination, and it is an expensive option. When you return the vehicle to the dealership, you will be required to pay a
