If you’ve never leased a car or truck, there are very important things you should know before you obligate yourself to a lease. Once you sign on the dotted line, if the terms of the lease agreement aren’t to your liking you’re out of luck. Vehicle dealers won’t go back and change the terms, and neither will the company financing the lease. Leasing a vehicle is comparable to renting, and when all is said and done, you won’t have equity in the vehicle.
This isn’t to say that leasing a car or truck isn’t a smart decision for some. If you typically drive less than 12,000 or 15,000 miles a year, a lease might be the perfect way to get the car or truck you might otherwise not be able to afford. A monthly lease payment might be hundreds less than a purchase payment, so leasing a car or truck isn’t always a bad deal.
How many people keep a car or truck long enough to gain equity? If your car or truck isn’t paid for and you decide to trade it in, chances are you won’t be given the payoff amount for the vehicle. The car or truck dealer will roll the balance owed on the vehicle you’re trading, into the new loan. You will end up paying the balance of a vehicle you no longer own. Cars and trucks depreciate faster than most people can pay off a loan. Those who want a new vehicle every few years, and are forced to take out a loan, will probably never gain equity in a new vehicle anyway.
Getting the Best Lease Price
Many people are under the impression that a lease is a cut and dry deal. They think the price is the same for everyone who considers leasing a particular vehicle, but this assumption couldn’t be further from the truth. If you’re interested in leasing a vehicle, be prepared to haggle the price. Your credit score will be taken into consideration, so don’t think you’ll be able to walk right into a dealership and obtain the lease price you want. Even if your credit score is excellent, dealers take it upon themselves to determine the monthly cost of a lease, and they decide how low they’re willing to go. The higher the monthly payment, the more money the dealership earns, so don’t jump too quickly.
Every dealership is different, so make sure you look into the lease prices other dealers are offering before making a final decision. You might find out another dealer is offering better terms for the exact same car or truck. The difference could amount to hundreds of dollars, so don’t take the first lease offer placed before you.
Before You Sign a Lease
Unless you’re an attorney, don’t expect to understand much of the lease agreement. A lease agreement isn’t meant to be understood by lease customers. A lease agreement is meant to protect the dealership and completely obligate the customer to the terms of the lease. Most lease agreements go so far as to warn a customer to seek independent professional advice if they don’t understand something. That’s great, but when ready to sign papers at a car or truck dealership who has time to run to their attorney’s office for an explanation? Most people put their faith in the professionals at the car dealership, and they assume everything is on the up and up.
Blindly signing a lease agreement without reading the fine print can take you by surprise later. Before you sign the lease, take the time to read it over, and if anything sends up a red flag, question the financial consultant at the dealership. If their explanation doesn’t make sense, ask more questions, and if you still aren’t satisfied with the answers you’re getting, don’t sign the agreement. Once you sign, you are bound to the agreement.
Sales Tax on a Lease
When leasing, since you’re not actually purchasing the car or truck, sales tax is figured and charged differently. Taxes are figured and charged on a monthly basis, and your lease agreement will list the total amount in tax you will pay over the life of the lease.
When you go to the license bureau to register your new car or truck, you’ll need to take a certified copy of your title application along with insurance information and a statement of the existing lease agreement. In a way you’ll get a break on paying taxes with a lease. Although you’ll pay a small tax fee once a month, you won’t have to pay tax up front as you would if you were purchasing the vehicle.
My Experience With Leasing
My husband and I recently leased a 2006 Toyota Tundra extended cab four x four from a popular Toyota dealer in Ft. Wayne Indiana. We made the mistake of not researching leases before signing on the dotted line, and the day after my husband and I signed a lease with this popular dealership in Ft. Wayne, my husband heard an offer on the radio that made him realize we were deceived. A Toyota dealer in Indianapolis Indiana advertised the exact same vehicle for $200 less per month, and that lease was for three years instead of five.
When my husband brought this finding to the attention of the Ft. Wayne Indiana Toyota dealer, they said they would look into the matter. After wasting a week before actually doing anything to change this lease, we were told it was too late. The salesman never offered us this wonderful deal, and the sales manager told us their dealership gave us the best deal they could. In the same sentence the sales manager told us we qualified for the lower offer. In reality they didn’t give us the best deal they could have. They gave us the highest lease price we were willing to pay. My credit score is excellent, but it wouldn’t have made a difference to this dealership. If we had shopped around before signing our lease, we would have definitely obtained a better deal.
We are very happy with the truck, but we will never again give this Ft. Wayne Indiana Toyota dealer our business. This dealer may have gained in this deceptive deal, but this Toyota dealer won’t gain our business in the future. We will also tell everyone we come in contact with to shop elsewhere. Word of mouth means a lot, especially when buying or leasing a car or truck.