Solution Auto Lease & Sales




Monthly car lease payments are usually lower than monthly car loan payments because you are paying only for the vehicle's depreciation during the car lease term, plus rent charges (like interest), taxes, and fees. As the cost of new vehicles has risen, the popularity of leasing has also increased. Leasing presents several advantages. Here are the main economic benefits to leasing: Low — or no — down payment Lower monthly payments Lower sales tax (tax is only paid on the amount of the car's value used — over three years this is half the amount of the car's total value) The three points listed above are beneficial because it means you can get a car without a big shock to your budget. You pay little money out of pocket, and you make smaller monthly payments. For example if you lease a car that costs $20,000, and it is worth only $13,000 after 24 months, you pay for the $7000 difference plus finance charges and fees. When you buy, you pay the entire $20,000, plus finance charges and fees. This is fundamentally why leasing offers significantly lower monthly payments than buying.



Q. I am new to leasing. How do I learn what I need to know? A. That's why we're here. The best place to start is to send us an e-mail enquiry@solutionautolease.com let us know your question and concern’s. Although there is a lot of information and advice we can provide, or simply visit us at www.solutionautolease.com to walk through our 4 easy steps to lease your new car.

Q. What parts of a lease deal are actually negotiable? A. Primarily, and most importantly, vehicle price should be the focus of your negotiation. This is the only element of the deal that is directly controlled by the dealer. All other elements such as residual, money factor, down payment, security deposit, and acquisition fee are all controlled by the leasing company, for which the dealer is only acting as an agent. Sometimes, though not often, the leasing company gives the dealer authorization to negotiate some of these factors. You can, however, shop around for better deals.

Q. Which is better — leasing or buying? A. The answer depends on a number of factors that are different for everyone. Your driving "personality", your vehicle choices, and your financial objectives are important factors.

Q. Are 0% loan payments less than lease payments for the same car? A. No. Lease payments will always be lower. But this doesn't mean that leasing is always better and you shouldn't base your decision strictly on payment amount.

Q. A dealer ad in my local newspaper had a new Honda Accord LX lease for $239. Is this a good deal? A. Maybe. But you won't know for sure unless you examine all the figures and conditions associated with that lease ad. The best way to do it is to work on all the figures including vehicle price, down payment require, residual value and the interest rate base on those figures you’ll able to get more detail of the deal.

Q. The residual on my new leased car is lower (higher) than the residual in your Lease Kit. What's wrong? A. Since residuals are independently set by leasing companies and car manufacturers, and can vary considerably, you can compare your offered value to our value to determine how good, or bad, it is. This is similar to comparing interest rates to national averages. In the case of residuals, the higher the better.

Q. The dealer said he would allow me to trade in my current car, regardless of what I still owed on my loan or lease, and give me a great deal on a new car. Anything wrong with this? A. Maybe. If you are "upside down" (you still owe more than your car is worth), the dealer will simply add the difference to the cost of your new car, which can dramatically increase your payments. So, the only time that this tactic makes sense is if you have some trade-in value ("equity") built up in your old car, over and above what you owe, that can be used to reduce your new payments. Take great caution with dealer salespeople's advice.

Q. Should I use my current car as trade-in on a new lease? A. It depends. (See previous question) If your current car is paid for, you can certainly use it as a trade-in. Just be sure you know its fair trade-in value, and that the dealer gives you full credit when your lease payments are calculated. If you still owe on your car, you will want to get the "payoff" from your finance company and compare that amount to the trade-in value of the car. If the trade-in value is higher, you have "trade equity." If not, you're "upside down" and you may want to reconsider. You know, too, that you would do better financially if you sold your car yourself.

Q. I just leased and made my first month's payment as part of my "lease inception" charges. Isn't this just a part of my down payment? A. No. With leasing, payments are always made at the beginning of the pay period, which means your first payment is due at the time you sign your contract. With loans, payments are due at the end of the pay period. This confuses many people, who may often think that the first lease payment is considered part of a down payment.

Q. What is the difference between "lease inception" amount and "down payment?" A. This often causes misunderstandings. Lease inception amount (same as "due at signing" or "drive out" costs) include all the charges that require up-front payment, such as taxes, fees, deposits, first month's payment, and down payment. Notice that "down payment" is only part of the total "lease inception" amount. The down payment amount is the only part that reduces the capitalized cost (amount financed) of the lease, which reduces the monthly payment amount.

Q. I want to end my lease early. How do I do it and how much will it cost me? A. As you probably already know, lease contracts are not designed to be easily terminated before the normal end date. However, you do have a number of options available to you that could minimize your costs and headaches. Unfortunately, an adequate discussion of these options would be too lengthy to present here. A full discussion of all your lease termination options, including how to choose the right option for you, Please e-mail your concern to enquiry@solutionautolease.com for more detail.

Q. I'm now in a lease and I can see that I'll exceed my mileage limit. What should I do? A. It's important to realize that if you drive lots of miles, you'll pay for those miles one way or the other, whether you lease, buy, or rent. Any vehicle depreciates in value for every mile that it is driven. You could consider purchasing your vehicle, which avoids mileage fees but this may not be your best option. For more details on possible strategies, see our advisor for more detail.

Q. What are the advantages and disadvantages of making a down payment on a lease? A. Making a down payment can substantially reduce your monthly payment amount. If you think you might ever want to end your lease early, an initial down payment can reduce or eliminate the cost of early termination. Many promotional lease deals require a specific down payment amount in order to get the deal. Some people mistakenly think that a down payment is a kind of deposit that you get back at the end of the lease. Not true. Having said the above, a disadvantage of a down payment is that, should your vehicle get stolen or totaled in an accident, you probably won't get any of the down payment returned to you.

Q. How about those "lease-like" deals such as GM's Smart Buy, Chrysler's Gold Key Plus, and Ford's Red Carpet Option? A. These are not leases, but conventional "balloon" loans that are promoted as having the benefits of both leases and loans. In order to have smaller monthly payments, there is one huge last payment, the "balloon." At the end, you either pay the balloon payment and buy the car, or you return it. The catch is that the balloon payment is generally less than the car is worth, making it almost a certainty that you'll buy. If you return it to the dealer, you're handing him this "equity" that belongs to you.


For more information about auto leasing, please contact us: enquiry@solutionautolease.com