Leasing New Vehicles
A lease is actually a payment for the use of a vehicle over a specified period of time, rather than a purchase. Your payments cover the vehicle's depreciation over the term of the lease. Because this amount is usually much less than the full purchase price, the payments can be less. You (referred to as the "Lessee") agree to maintain the car during the lease and only put the number of miles specified in the lease agreement. At the end of the lease, you return the vehicle or may take advantage of the option to purchase it.
Is Leasing Right For Me?
Are you a driver that takes care of your car and puts between 12,000 and 15,000 miles on your car a year? If so, you might find that leasing makes good sense for you by offering lower payments and an opportunity to drive a new car every two to three years. On the other hand, if you put a high number of miles on your car (in excess of 20,000 miles per year) or tend to drive your car for 5 years or more before trading it in, leasing may not be the right option for your needs. We are knowledgeable about both plans, and can provide you with specific details about the car you are interested in.
Balloon Note: This is very similar to a lease. The difference is the vehicle is registered and insured in the customer's name. This allows customers, in states where leasing is not popular, to enjoy the same low monthly payments as with a lease.
Net Capitalized Cost: The amount used to determine the lease payments. This includes destination charge, acquisition fee, and security deposit (refunded at the end of the lease) minus any discounts from the vehicle's residual value at the end of the lease, and any capitalized cost reduction (down payment).
Capitalized Cost Reduction Payment: A payment made to reduce the net capitalized cost and therefore the monthly payment amount.
Conventional Financing: A financial note or installment credit that pays for the principal (the value of the car) and the interest. At the end of the note period or installment term, the full amount has been paid. Longer terms (66 and 72 months) are used to lower the payment, but typically customers trade their vehicles before the note comes due or the contract is paid in full. The payoff amount for longer-term financing will most likely exceed the value of the vehicle.
Depreciation/Residual Value: The amount the vehicle's value will decline over the length of the term. For example, a vehicle may be worth 45% of its original MSRP (Manufacturer Suggested Retail Price) at the end of 36 months. Therefore, its deprecation would be 55% and its residual value would be the 45%.
Money Factor: Equivalent to the interest rate on a loan. It is the interest rate divided by 24 (regardless of term).
Term:The length of the lease. Typically, most leases are written for 24, 36 and 48 month terms.