Down economy changes lure of leasing

by Center for Personal Finance editors

McLEAN, Va. (8/4/08)--The sluggish economy is making automakers cut back on leasing options, causing many companies to suspend their programs. Dealers who still want to offer leases may have to line up their own financing (USATODAY.com July 30).

It's not only automakers changing their ways. Some consumers who began leasing large SUVs and other vehicles before gas prices got out of control actually are trying to get out of their leases on websites such as swapalease.com.

That's not to say you can't--or shouldn't--lease anymore, but if you're thinking about going that route, brush up on leasing knowledge before closing the deal:

Be sure leasing suits you. If you want to drive a new car every three years, drive only 12,000 miles to 15,000 miles a year, or use your car only for business, you might be a good leasing candidate. If you want to own your car and drive it as long and far as you please, this might not be such a great choice;
Know the number of miles you're allowed to drive during the lease term. Extra miles typically will cost between 10 cents and a quarter per mile (CNNMoney.com July 30);
Be clear on what's considered "normal" wear and tear on the vehicle and what's "excess"--you'll pay extra for excess wear and tear;
Before going to the dealership, find out what your credit union can offer in terms of financing. A professional there also can help you weigh your options;
Look at all costs involved. In addition to your monthly payment there could be up-front costs and closing costs. Know what you'll pay if you decide to end the agreement early as well. Ask your insurance provider if you're required to increase your insurance coverage; and
Negotiate the price just as you would if you were buying. Don't let on that you're leasing until you have the car price you want.

To determine if buying or leasing is a better move, use the "Should I Purchase or Lease?" calculator in Home & Family Finance Resource Center.

NCUA Equal Housing Opportunity
Printed Friday, January 9, 2009

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Down economy changes lure of leasing