Mark Solheim over on Kiplinger thinks leasing cars has a bad rap, and that more people should be doing it. “If you know what you’re looking for and negotiate smart—and get over the five myths below—leasing can be a good deal.”
- Myth 1: Buying is cheaper than leasing — as a rule, this is usually true only if you “keep a car well past the day the loan is paid off (or you paid cash to begin with).” If you trade in the car before the loan is paid off, leasing may be a cheaper route.
- Myth 2: It’s nearly impossible to negotiate a good buy — in fact, you can negotiate a better deal if you learn some of the basic terminology (like capitalized cost, money factor and residual value) and ask the dealer to show you several deals from different banks.
- Myth 3: Only businesses get tax breaks — Solheim says individuals can get them, too: “In most states, you pay sales tax only on the monthly payments, not the sale price of the vehicle.” The exceptions: Arkansas, Maryland, Minnesota, Texas, and Virginia.
- Myth 4: You may have to pay hefty fees when turning in the car — Solheim just says that you can negotiate a higher monthly fee for a larger mileage limit if you need it “and still save money.”
- Myth 5: If you want out early, you’re stuck — there are now websites where people who want out of leases early meet up with people who want short term lease, so everybody wins!
Read the full article at Kiplinger.