Car buying and leasing is not as simple as walking into your local dealership, pulling out some cash and saying "I'll take the red one." You need to learn a few things before you even consider walking into the dealership. It pays to be aware of the extra costs and restrictions you may encounter.
The first thing you should be aware of is the extras. Most extras can end up costing you a lot of money you don't need to spend. The salesperson at the dealership will try to add these things to your contract and sometimes uses ways that make it difficult to refuse. You don't have to be a victim of heavy-handed sales practices, however. If "no" is not a word the salesman wants to hear, you can and should take your business to a different dealership.
The "extras" you may find on your contract when you buy a car that are unnecessary include things you can often get at a far lower price at a later date, like extended warranty coverage, rust proofing, paint sealant and anti-theft devices. These things are often either unneeded or much less expensive elsewhere.
Another cost you should be aware of when you buy a car is the financing. It is usually better to obtain your financing away from the dealership. Most dealerships receive a percentage from the lenders when they get the financing for you and, because of that, you may actually pay a point or more extra on the interest rate. It is good advice to look for financing in other places first, so you know what your lowest available rate is before you find out what the dealership is offering.
If you're leasing a car, choosing the best among the car lease options can also be a bit tricky. There are some items you will notice on your lease agreement that you should be aware of.
This is the amount the dealership can charge you to prepare the paperwork. Most states have a set amount for the title paperwork that is around $5 or so, but many dealerships will attempt to charge for preparing the financial agreement, going to the DMV to collect your tags and even getting your insurance company to stamp your paperwork. Anytime you see document fees listed on your contract, ask for an itemized bill so you can negotiate the prices.
If you're asked for a deposit to hold the vehicle until the paperwork goes through, you should verify whether or not the amount is refundable. In some cases, if you don't get approval for the lease agreement, the dealership will keep this money. The best practice here is to be sure you want this vehicle, and make the deposit the smallest amount that the dealership will accept.
Related Questions and Answers
Are Car Leasing Prices Cheaper Online than at a Dealership?
Car leasing prices are usually set by the manufacturer or a leasing company affiliated with the manufacturer so the the rates you see online are normally the same as the rates you will be offered at the dealership. When you lease a vehicle, you are only paying for the value of the vehicle you are using. So a leasing company will determine the value of the deprecation that will occur over the life of the lease. They divide that by the number of lease payments to come up with the payment. The money factor is the interest rate you will pay for the lease, and this is added in to come up with the total lease payment.
What is the Shortest Lease Contract I can have?
A short lease is usually twelve months long. One year is about the shortest period of time that a leasing company will write a lease. The majority of leases are between 34-60 months long. If you are looking for a shorter lease, contact a rental car company. They will often rent cars on a long term basis at greatly reduced rates. Another option is to visit a site and look for a lease with less then a year left on it, and take it over. These can be hard to find, as most people will just finish out the lease when they get down to less then a year left.
Will the APR Change if I Take Over a Car Lease?
When you take over a car lease, the conditions of the lease may change or they may stay the same as the original lease. The leasing company will want to rewrite the lease in your name and some of the conditions may change from the original lease. When it comes to leases, the interest rate is referred to as the money factor, not the APR. When you take over a lease the money factor rate may change, which will affect the lease payment but in the majority of cases, it will stay the same.
Are there any Fees in a Lease Transfer?
Yes, there are lease transfer fees when transferring a lease. The leasing company will require the lease be put into the new persons name and there will be fees involved. The leasing company will probably charge you an early termination fee as well as processing fees. There are companies that will handle the paperwork for you, but they will charge your for their services in addition to whatever fees the leasing companies charges. Getting out of a lease can be time consuming and somewhat expensive, but it can be a real lifesaver if your lease payments have become too expensive.
What is Required for a Vehicle Lease Agreement?
A vehicle lease agreement is a contract between two parties, the party leasing out the vehicle and the party leasing the vehicle, where there are items required for the lease to take place. Both parties will need to sign the document after agreeing to the terms of the contract beforehand. The items required for a vehicle lease agreement include the leaser's driver's license, their address, their contact information and any finance approval forms needed. The length of time of the lease must also be on the table prior to either party signing the contract so as to avoid any confusion.
What is Considered a Long Term Lease?
A long term car lease is any lease that lasts from 36 months to 84 months at a time. A 36-month lease lasts for three years, a 48-month lease lasts for four years, a 60-month lease lasts for five years, a 72 month lease lasts for six years and an 84-month lease lasts for seven years. 84 months is the longest available automotive lease today and is becoming extremely popular because of the length of time it allows borrowers to pay off the loan, which comes in very small monthly dollar amounts. The 84-month lease is the most affordable auto lease.
Do I Have to Pay Taxes for Online Car Shopping?
So uou do not wish to purchase a vehicle from a physical dealership, instead you choose online car shopping. Some people think that just because they purchase a vehicle from an online shop, it means that they do not have to pay sales tax. This cannot be further from the truth. Any vehicle purchased online must have sales tax paid on the sale by the purchasing party. Should you purchase a vehicle on the Internet and do not pay the sales tax, even if you purchased it from a state that does not have sales tax, you will be fined by the government.