They say leasing is just another way to finance a car or truck.
This is partly true.
But for me, leasing is a complete game changer. It allows me to get more car for a lot less money.
With that said, there are many potholes on the journey to a successful lease…
Here are the top car-leasing mistakes I see:
Pay full price
The VAST majority of newly-leased vehicles are written up at full MSRP sticker price.
Car dealerships give us the idea that leasing is different than financing. And leases are written at full price.
This is a whopper of a lie.
Because my clients get discounts up to 24.5% off their leased cars.. And this savings lowers their payments by hundreds and hundreds of dollars per month.
I never pay a down payment.
We lose our entire down payment if our car is totaled or stolen. Yep… even if we have GAP coverage, the insurance company uses our down payment to cover losses. After that, they pay off the rest of the balance.
Better: we can tag a down payment instead as a “security deposit”. This makes the leasing company happy AND bulletproofs our money in case of a total loss or theft.
Almost every car leasing company allows us to “roll in” down payments, acquisition fees, doc fees, etc. into the cost of leasing…
That means we get into a newly-leased car with no money down at all. This is a true sign and drive. At most, we need to prepay the first month lease payment and DMV tags.
The low monthly price
I find many people lease a car because of the starkly lower monthly payment.
And that is great…
But, paying for the car is just part of the total cost of access.
I always figure out the cost of insurance and gas usage to get a total cost driving the vehicle per mile.
Sometimes, we can slash the cost of auto insurance when we pay more for a vehicle… let me explain:
Many people are terrified of the up-and-coming self driving revolution.
They do not want cars to drive themselves.
But the reality is beyond the year 2020, most of us will be riding in cars that have no steering wheel, brakes or gas pedals. This is known as Level 5 Autonomy.
Now is the time to embrace this technology. And when we do, our cars are safer. We can usually walk away from the most horrific crash. And insurance rates plummet.
As a result, I have seen $70,000 luxury cars with nanny technology insure at half the price of an $22,000 car (without the latest safety technology).
Most vehicle leases here in the United States include GAP insurance. (Toyota is the exception. They charge extra for this).
GAP coverage does not cover “roll over debt”. This means if we are “underwater” from our last vehicle and add this negative equity into a new lease, GAP coverage is nulled out!
When we negotiate a super-low price on a leased vehicle, GAP insurance is unnecessary. So we are paying a premium for nothing.