Why you should never put money down on a lease?
Many people believe that car leases demand down payments, but this is not the case. In fact, we advise against making any kind of down payment when Auto leasing. There are various reasons for this, the most important of which is that if your vehicle is stolen or totalled within the first few months of your lease, you could lose the money you put down. In the event that a car is stolen or totalled, insurance companies reimburse the real market value of the vehicle. Your down payment is not totally covered even if you have GAP insurance.
Imagine putting down
$3,000 on a car you don't own, then having it stolen and losing that money!
That's a massive hit, yet it's not as unusual as you may believe. Another
reason to avoid putting any money down when Car Leasing is that you will
have to pay taxes on it in most states. (If you roll it into your monthly
payment, you'll still have to pay taxes, but it'll be paid off over time.) Low
upfront fees and low monthly payments are meant to be two of the key benefits
of leasing, allowing you to free up cash flow. It defeats the purpose if you
have to pay up several thousand dollars up front. Always keep in mind that
leases are adjustable; it's easy to roll any down payment into the monthly
lease payment, and you should do so whenever possible.
A down payment on a car
lease is commonly referred to as a capitalized cost reduction, or cap cost
reduction. Unless you have bad credit, putting money down on an auto leasingNYC is usually not required. You shouldn't make a down payment on a lease
if you aren't compelled to. The most important thing to remember is that,
unlike a car loan, putting money down on a lease does not lower the overall
cost and save you money in the long term. This is due to the fact that all
interest costs are factored into the lease price up front, ensuring that the
total cost of the lease is known ahead of time. The total amount you pay
remains the same whether you make a down payment or not. Putting money down, on
the other hand, does lower your risk.
Let's imagine your lease
from the best auto leasing companies NYC is $5,000 for a period of 24
months, including taxes. If you put down $1,500, you'll pay $3,500 over the
course of the 24-month lease, making your monthly payment $145.84. If you put
down $500, you'll end up paying $4,500 over 24 months, or $187.50 a month. In
either case, you'll end up paying $5,000 in total. A down payment on a car
loan, on the other hand, has a quite different impact. Interest charges are not
included in the purchase price of an automobile when you take out a loan.
Interest is charged on a daily basis based on the outstanding loan sum. When
you make a down payment on a car loan, you reduce the amount you borrow and, as
a result, interest is levied on the remaining loan balance. This is why putting
down a deposit on a car loan decreases the total cost.
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