Leasing makes sense for some people and does not make sense for others. Dealerships make more money on leases. How can that be with the great lease deals that are offered? Again, knowledge is POWER.

When you lease a vehicle, someone else buys the vehicle for you and then rents it to you. Why do they do that? The answer is simple, to make money.

If you get the vehicle at a monthly payment that you can afford, why should you care if the leasing company makes money? Again, the answer is simple, in many cases your payment could have been LESS! Without inside knowledge, you just don't know if the deal is good or not!

• OK. Let's examine a sample three year lease. The dealership sells a vehicle out of inventory for $25,000 to a leasing company. The leasing company calculates that the vehicle will be worth $18,000 in two years. The leasing company now calculates a lease payment where the balance is paid down to $18,000 after 36 installments. ($25,000 - $18,000 = $7,000) divided by 36 = $194.44. Add on interest charges for the unpaid balance and the lease payment jumps to $213.00 a month. What you don't know is that the dealership sold the vehicle for $2,000 more than it normally would and the interest rate used on the lease was 5%. You could have reduced your payment by over $60 a month with a better price and a lower rate!
• It's hard to make lease comparisons because the selling price of the vehicle is never disclosed and the underlying interest rate on the lease is never disclosed. So what do you do to get a comparison? Call or visit the credit union to get a lease-like (Low-Payment Loan) comparison quote. This will enable you to decide if the lease offer is good!
• Leases have mileage restrictions. If you drive more miles than allowed, you will have to pay for the excess miles when you turn the vehicle in.
• There is an up-front damage deposit on most leases.
• You will be charged for excess wear-and-tear when you turn your lease vehicle in.
• If you can no longer afford your lease payment, you have limited options.