Auto Transportation

Posts Tagged ‘lease’

Is leasing a car, rather than purchasing a car on time payments a good thing or not. As with questions in life, it all depends on your financial and/ or automotive situation and as well who tells the story.

It is true that business can write off lease costs whereas that is not such an advantage to an individual car user. However this is not necessarily so. First it all depends on your situation and as well you’re negotiating skills. It is always better to be in an informed and prepared manner.

First of all leasing a car is downright attractive due to current low interest rates. Almost every month you will read in the popular news that the “Fed has cut interest rates again”. What this means to you is that in an overall sense that interest rates are less to you. This should mean lower leasing costs to you. If interest rates, in the banking industry and market are lower, so should be the interest rate basis in your lease negotiations and payments.

What are the advantages of leasing a vehicle? You will get a new vehicle to drive. When your leasing agreement term is over – then you hand the car in and walk away.

It may be debated that by leasing the car you will have no equity or asset accumulation left at this point in this automotive transaction. If you had bought the car, with payments, the car would be yours at some point, lock stock and barrel.

However major components and overall costs of running a car are maintenance costs. With a new vehicle – it is unlikely that you will incur these costs. First of all the car is new. Major repairs and costs are unlikely. In addition the car will come with a manufacturer’s warranty which should cover you for the majority if not all of the lease time period.

With modern, newer and especially smaller cars it seems that all repairs seem to be very expensive. After a certain point of time, use and mileage, it is not as if the car “nickel and dimes” you to death. Most of the innards of modern cars seem to be electronic in nature with advanced (read expensive and hard to fix) modules. There are few simple to repair mechanically based, non electronic component, cars. In addition for mechanics to work on cars now “everything is struggle’ “and as well spaces are tight and very hard to work within. In a summary the old “nickels and dimes” are now “five hundreds, thousands and several thousands”. With a leased car arrangement you may not own the car, with its equity. Neither do you have repair costs and heartaches. In addition you have a reliable vehicle to get you to work or to chauffer around your family.

There are several terms and factors to be knowledgeable about in your calculations and comparisons for auto purchase versus lease workup and lease negotiations.

First of all research the leasing tax rules in your jurisdictions. For example in your state you may well only pay sales taxes on monthly payments, not on the cost of the vehicle. It all depends on the negotiations of your payments- which involve the time frame and value of the car at the take back time end of lease.

Next what are the fees? For example the fee at the end of turn in, paperwork fees and fees for “excess miles”. Are these negotiatiable? In the case of the “excess mileage” and “excess mileage fees” are these carved in stone or can the allotment or rates charged be reduced? In the case of the “turn in” fee. If you offer to increase your monthly payment – often this fee will be reduced.

In order to best negotiate you will have to speak the same language and terms as the lease negotiator. Several terms to know, comprehend and understand are “Capitalized Cost”, “Money Factor” and “Residual Value”.

Simply put the cost of the leased vehicle is confusingly described as the “Capitalized Cost”. Just as you would haggle over the cost of buying a new car, you should not accept a stated price or manufacturers suggested retail price (M.S.R.P.) as the price paid.

Haggle and argue over the “Capitalized Cost” just as you would in any car or automotive deal.

Next in line in proper automotive leasing terms is the term “Money Factor”. “Money Factor “is the interest rate upon which the leasing calculations are based upon. The lower the number of the “Money Factor”, the better for you. As a rough guide and estimate multiply the “Money Factor” value by 2550 to get an estimate of the relevant interest rate.

Last in the line of leasing and leasing lingo is the term “Residual Value”. “Residual Value” is the amount that the car, S.U.V. or truck vehicle is said to be worth at the end of the lease period. Simply put, the more the vehicle is deemed to be worth, at this time period, the less will be your total amount due to be paid overall for your lease. Thus the higher the “Residual Value” at the end of your lease, the much lower will be your monthly lease payments.

In the end, your car purchase or lease decision will come down to two factors. Reliability of transportation and the total cash outlay from your personal pocketbook or wallet.

With the big three already deep in the doo doo, is the Chevy Volt the answer to General Motors problems or will it prove to be the final nail in the manufacturers coffin.

Much has been made of the Chevy Volt, a plug-in electric hybrid. GM sees this idea as the saviour of its company. The only problem may be that the technology is already out of date by the time it is launched. Battery power may indeed prove to be a viable alternative to the internal combustion engine in the short term, but with limited mileage on a full charge and hours needed to recharge, the hydrogen fuel cell looks, on the face of it, a much better long term solution.

Enter the Honda FCX Clarity. Powered by a hydrogen fuel cell, the Clarity has been hailed as the most important car launched this century. Creating electricity by combining hydrogen that is stored in a fuel tank on board the vehicle, with oxygen from the air, the only bi products produced are heat and water. Giving us the first truly eco friendly car, that is, if you ignore how the hydrogen is produced (currently from electricity generated from fossil fuels).

With a top speed of one hundred miles per hour and a claimed range of 280 miles, the Honda Clarity does not need to be recharged and does not need a conventionalinternal combustion engine to top up its charge, it is simply filled with gaseous hydrogen at suitable filling stations. These stations may be limited at the moment, but as demand grows for these vehicles more stations will no doubt follow.

Currently available on a six hundred dollar a month three year lease, the Clarity will no doubt already have a host of celebrities lining up to confirm their green credentials and as it is only available in southern California (probably the most environmentally aware location in the States) the allocation has already been filled. This area has been chosen for the trials purely and simply because it has at least got a few of the hydrogen filling stations needed to refill the Clarity.

So, with General Motors announcing that it will delay the completion of the factory that will produce the engines for the Volt, even though it has been held up as the symbol of their future. It is looking more and more as if the hydrogen car may overtake the electric / hybrid plug in before it even makes it into the showrooms. GM hope to launch the Volt in 2010, but Honda will have no doubt ironed out any glitches with the Clarity by then, giving them a clear advantage over others, just as Toyota did with the Prius.

With technology moving towards cars that produce zero emissions General Motors may be pinning their hopes on a car that has a very limited shelf life. Historically, it has been very late in realising that its customers needs have changed. In its haste to catch up, has it once again misjudged the direction in which the market is moving? If it has, then theChevy Volt could very well prove to be the final nail in the coffin for General Motors.