Auto Leasing is back, finally!

This Memorial Day 2012 will see the official start of the car sales selling season with BIG auto lease deals in every brand.

Let’s get one thing straight before you venture out to the car lot. It’s a SELLERS market.  Limited inventory, limited banking resources and huge demand. You need to be smart about your approach to car buying because the dealers are NOT desperate to GIVE AWAY cars and the banks are not dying to loan money to people with less than PERFECT credit. The leasing movement will help revitalize the industry and correct the drought of used cars by cycling 2 and 3 year old cars into the system over the  next few years, however, the new rules of leasing will surprise many car shoppers this selling season.

THE NEW RULES OF 2.0.12 AUTO LEASING.

Auto Credit scores MUST be over 720 to get the advertised rates, and anyone not holding the AUTO FICO of 700 can kiss their chances of leasing to the curb without 25% CASH down. Foreclosures, Short Sales and Bankruptcy eliminate your ability to lease a car without having already re-established your car credit prior to the lease.  Just because you previously leased luxury cars and paid the leases perfectly, DOES NOT GUARENTEE you will be able to lease again from the same car bank or another competing brand. The auto leasing banks are scrutinizing every line of the credit report, application, tax return and bank statements. Welcome to the new world of auto finance; you must be PURRFECT to play. CASH DOWN is important.  It was once thought that the point of leasing was to keep your CASH liquid, especially if you are a business owner writing-off your auto expenses for tax purposes.  Today’s auto leasing programs are pitched with serious cash down of $3995 PLUS  sales tax, registration, bank acquisition and dealer fees.  The hefty cash down or inception fees are capital cost reductions that not only lower the payment, but give the bank a reasonable hedge against default. LOWER MILEAGE limits vary with the term. Luxury car makers are offering mileage breaks for 5,000, 8,000 and an average 10,000 miles per year, which keeps the depreciation down, and helps drivers who own multiple homes and need a car in every carport. However, the typical drier needs to be reasonable about the number of miles he will need and what the cost is should he go over. Don’t be swayed by promises of early lease termination or pull ahead programs to get you out in the event of over-miles, the crystal ball and the salesman holding it could be long gone 3 years from now.  Buy an average number of miles for your typical annual use. GAP Coverage is a must, but not automatic in every lease today. Make sure there is GAP insurance in the lease contract to cover any difference in value paid by your insurance company and the remaining lease payments. GAP coverage is inexpensive compared to the potential cost to you without it.  Don’t agree to pay for it, UNLESS you see it is NOT printed on the back of the contract. RESIDUAL VALUE Does NOT equal BUYOUT PURCHASE OPTION: ALLY BANK Until 2010, most lease contracts had a line for the residual value and a line for the purchase option at lease end, and the number on each line was the same. There might have been a pre-printed dollar amount of up to $500.00 as a “fee”, but it was spelled out as such. Then came ALLY, the newly re-designated GMAC leasing arm of formerly General Motors bank. Their new auto lease contract packs a hefty $2500.00 onto the “residual value” to become the actual LEASE END Buyout Purchase Option. Don’t sign it if you think you will buy the vehicle at the end of the lease, demand a different bank where the buyout is more reasonable, and if this wasn’t disclosed prior to your trip to the finance department, be prepared to LEAVE, without the car.  This is NOT NEGOTIABLE at the end of the lease, (remember the crystal ball?). Granted you are not obligated to BUY the car at the end, but signing the contract before reading the fine print won’t undo the problem later. So as you make your list of possible cars from the television ads shouting at you… be ready with your checkbook, credit score and several different vehicle options should one or two not pan out. READ MORE: 3 tips for car shopping this Memorial Day season. READ MORE: USED CAR SPECIALS this MEMORIAL DAY Holiday Car Sales. READ MORE: Memorial Day holiday Car sales rebates, incnetives and more… ———————————————————— Sarah Lee Marks is MyCarlady. She has over 22+ years of experience. She writes about cars, and is a staunch consumer advocate on car related subjects. MyCarlady offers free car buying advice, and private, auto-related services to help you maintain your personal or commercial vehicles. Call Sarah Lee for more information: 702-521-7546 ———————————————————————————————————————————————————————————– ]]>