How to avoid getting fleeced by a lease!

The deal sounds incredible. How could you afford to pass it up? You could be behind the wheel of that shiny new car you've always dreamed about for about the same monthly payment as an average sedan being sold on the same car lot. By leasing you could get your car for a fraction of what it would cost you to buy that very same car. How can you lose? So you shell out your initial down payment, and drive your dream machine off the lot.

Been there, done that. I heard the "great deal" pitch from a lot of people, some who's opinion meant a lot to me. So based on what we were hearing, my wife and I signed a lease on a new Toyota Camry . They say hind sight is 20/20, and that's true here. Looking back I can see what a mistake it was, and it's one I will not make again.

It's not that we had a bad experience. The dealer was friendly and helpful, and the car was great, but financially it was very costly.

Instead of being the great deal everyone said it was, I learned that it was a very expensive way to get a new car. Consumer Reports and Smart Money magazines both reported that leasing is perhaps the worst possible way to get anew car. Think about it; you make monthly payments on someone else,s property, pay all the maintenance costs, and at the end of the lease you give it back to them. Although most lease agreements do allow you to purchase the vehicle at the end of the lease, but these agreements end up being basically "rent-to-own" programs. If you decide not to purchase the car, you're left without a trade-in, and you will either have to pay full price on your next car, or enter into another lease.

Before you decide whether or not it's a good deal, look at the numbers. Let's suppose you're going to rent a new car worth $22,000. In three years when it's time to turn your car back in, its value will be about $10,000. Who do you think pays for that lost value? You do. You will be paying about $333.00 every month to cover the value that the car is losing. Not only that, but your also paying for the use of the car, plus interest. How much interest are you paying? It's really hard to say. However, the rates are pretty high.

You see, the law requires full disclosure of interest rates for lending institutions like banks and credit card companies, but the powerful auto industry lobby has successfully argued that auto leasing is not the same as lending money. Because of this leasing agents

• 1
• 2
• next page >>

---

Add your voice

Know something about Leasing vs. buying a car?
We want to hear your view. Write now!