Determining how to obtain your next mode of transportation can be a tricky question, especially in such a challenging automotive market. Leasing a car can offer some true advantages to ensure present and future lowest cost of ownership.
Cost Structure of a Lease
When leasing a vehicle, payment will depend on several factors. The cost will consist of the cost of the vehicle, the residual value of the vehicle, and the profit that the lessor will stand to make. Most vehicle lease payments will range between $300-$500 dollars per month, depending upon the various factors that make up the lease. Also, since the lease will be based on annual mileage, over-mileage charges typically average 20 cents per mile.
Vehicle Cost
Predicting what a lease payment cost will look like can prove to be tricky. Most dealerships and even a decent amount of commercial lessors’ offer a closed end lease structure meaning that the payment is based upon the end value of the vehicle. This can make deciphering a payment difficult because even though one vehicle may have an acquisition cost that is higher, depending on the final worth, the monthly payment could actually be lower. Therefore, when looking to lease a vehicle especially one that is a traditional dealership lease or closed end, looking to ending value is the best indicator of the monthly payment.
Residual Value
Residual value is based upon a few very important factors. The first is the market, and how much consumers want the vehicle at that particular time. For example, when gas went up to over four dollars a gallon, big SUV’s had a horrible residual spiking up monthly payments. One of the best ways to look at consumer interests is www.edmunds.com. This website provides consumer reviews and assesses the true cost of ownership which includes maintenance, residual or depreciation information, fuel, and insurance costs. Next, is the time of year. It is never wise to enter into a lease at the end of a model year. Manufacturer model years are all the same and run from August to July. The earlier the vehicle is obtained in that model year the better the residual. Next are the important factors of how long the vehicle is going to be leased and what the annual mileage is going to be. Based on those factors, the payment could be very low or very high.
Profit
Obviously, the car business exists to make a profit. On a closed end or traditional lease, profit is typically assessed by one monthly fee. This fee will range on credit worthiness, term length, and the lessor. Most profits range from $40-$100 dollars per month. The profit is usually the smallest amount of the cost, so make sure that the numbers make sense when assessing the cost.
Ascertaining the cost of a lease can require a bit of homework on the lessees part. However, with a little determination and understanding, obtaining a competitive payment can be very possible.
- How Does a Car Lease Work?
- How Much Does It Cost to Lease a Car?
- How Do You Lease a Car?
- Lease Vs Buy
- How to Lease a Car?
