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When Leasing A New Car Makes Sense

Forgive me if I avoid all of the technical details of leasing a new car. Certainly, if you plan on seeking a lease you should select the lease terms that are most attractive to you. A closed end lease, where you have no additional commitment at the end of the lease term, is the only wise choice for consumers. Beyond that, there are some great reasons why auto leasing can work well for a certain group of drivers. Read on and I will share with you some tips on how you can make auto leasing work to your advantage.

The Deal - Auto leasing is ideal if the deal is real. Avoid leases where "cap cost reduction" is a big part of the contract. With this "feature" you are basically paying up front for the car's depreciation in exchange for a lower monthly rate. That $199 month payment on a Honda Accord looks great until you learn that you'll have to pay $2732 at signing to cover the cap cost reduction and your first and last month's lease payment. In reality, your $199 monthly payment becomes a $264 monthly lease when you spread the cost of the fees out over the 36 month lease.

The Miles - I must tell you that if you drive your car a lot, then a lease isn't right for you. Most leases allow you to rack up 1000 miles per month or 12,000 per year. For a 36 month long lease you had better have under 36,000 miles on your car or face a surcharge of at least 20 cents per mile for going over that amount. For example, if you turn your car in with 39,864 on the odometer, you could face a bill for $773 at the end of the lease for excess mileage. Only lease if you know that you won't be driving the car a lot.

The Maintenance - Ah, now for the best part about leasing: you won't have to pay much for maintenance. If something breaks, then likely it is covered under the car's warranty. Otherwise, expect to rotate the tires perhaps two or three times and pay for a half dozen or so oil changes. Change the wipers once and you can return your gently used leased vehicle without worrying about major repairs. You get rid of the car before major repairs are warranted.

Leasing makes the most sense if you like to drive a new car every three years and you don't want the headaches of funding repairs and maintenance. Sure, you'll have to make monthly lease payments but if you find the best deal going your payments will be less than payments made for a purchase. Who wants to keep an old car around forever anyway?