Often when leasing is explained, most would say that renting and leasing are analogous. However it is not true; leasing and renting are two different things; here’s why.

Car rental basically answers only short term or temporary auto needs such people who are currently in a business trip or those who are  in a holiday vacation.

Cars for rent are wholly owned by the rental company. The auto rental company, handles the maintenance and repair, and also carries the basic insurance. Customers, in turn, agree not to damage the car, to buy the gas, to purchase an additional insurance if necessary, and to return the car within the agreed time.

Car rental rates can vary widely since this can be based on a daily or weekly fee which can have an unlimited mileage or not (additional mileage is an additional cost).   Same cars are rented over and over again unlike car leasing wherein the car needs to be disposed.

Unlike car renting, car leasing is actually another form of financing. A car leasing company only gets involved once the customer decides that he wants to finance his next car via leasing. The car leasing company then buys the car from the car dealer at the price agreed (with the client) and then loans it back to the customer which in this case is the car.

Since the lease company has invested money in the vehicle, due interests will be paid by the lessee.  The leasing company also expects to be paid for the residual value of the car as the lessee makes use of it. When the lease ends, vehicles are returned to the company although the lessee has a purchase option at the end of the term.

• Leasing is a form of financing and renting is not.
• Lease terms begin at 24 months while renting can be a day or two.
• A customer’s credit report is important in order to acquire a lease while in renting it isn’t.
• Leasing appears on your credit report just like a loan and renting doesn’t. If there are any default in payments, this will appear in your credit score.
• In rental, your choice of vehicles is only available from the auto selection of the rent-a-car companies, while in leasing you can pick the car your heart desires.
• Ending the rental early is fairly easy by just returning the car. Ending a car lease, on the other hand can be pricey since there are several fees that a lessee must settle.
• Renting can come out more expensive than car leasing if the length of time is the same

Often individuals turn to car leasing because of the assumed low-monthly payments. However, when you look at the various stages of car leasing, there are more “car leasing related fees” that actually meets the eye.

At the very start of the lease, the lessee will have to pay a refundable security deposit which is typically equivalent to one monthly payment. The security deposit is paid as such to safeguard the car leasing company against non-payment and any incidental damage done to the car after the end of the lease. The lessee is also required to pay the acquisition fee, otherwise known as bank fee, this is an administrative fee charged by the car leasing company. This fee is not, usually, specified explicitly in the car lease contract but this is included in the Cap Cost when calculating for the monthly payments – so make sure to ask about it if you don’t see this mentioned.  There are other fees as well, such as fees for licenses, registration, title and any state or local taxes.

During the car lease, as a lessee, you are expected to honor your monthly dues; failure to do so will result in another fee in a form of late-payment charges. There are also financial obligations in the form of traffic tickets, emission and safety inspections and the ongoing maintenance costs. When the lessee at the mid-term of the lease feels he can’t deal it anymore and just wants to end the lease before the agreed term, he will then be charged with a “substantial” amount for early termination.

At the end of the lease, if you exceed the allowable mileage, expect to pay the “excess mileage charge” which can cost right about 10 to 20 a mile.  Incidental damages done to the car, and deemed to be beyond what’s identified as normal, will result in “excess tear-and-wear charges”. Finally, if you choose not to purchase the vehicle, then you have to pay a disposition fee.

In car leasing, a high mileage is definitely an issue especially during the end of the lease term. Often in car leasing, the lessee is only allowed a maximum of 12,000 annual mileage which is why its always important that the lessee ask himself beforehand if he needs to be running a high mileage. Car mileage will always cost you regardless of whether via leasing, buying or renting. Wear and tear aside, the rising cost of fuel and the continuing onslaught of environmental levies should encourage any driver to keep his mileage down.

However a high mileage user should not totally put off leasing completely because of the mileage restrictions. There are ways on how to maneuver a high mileage car leasing and this article will offer some tips.

1. Pulling some strings at the lease deal – If a car lessee intends to purchase the car at the end of the term, he can cunningly take out a low mileage car lease contract without worrying about the excess mileage charges accrued over the lease period. This way, the lessee can maximize his car usage while still paying monthly rentals over the period of the lease agreement.
2. Drive a Diesel – Diesels have vastly improved; now they are cleaner, quieter, and quicker. More importantly, diesel engines can give any driver a 30-40% more mileage than petrol cars. Diesels is really a great money-saver particularly for many short-run trips since the superior torque of diesels entails less gear changing. The price of diesels are about 30% cheaper than unleaded petrol which is certain to lessen the gas expenses. Just look beyond the lack in horsepower, higher initial cost and loud engine start during cold winter mornings; a diesel-engined car certainly suits a high mileage driver.
3. Lower Residual means lower purchase price – The main reason why in car leasing high mileage is such an issue is that it can inflict a bigger depreciation which in turn lowers the resale value of the car. There is an offset effect of low resale value  and that is a low purchase price. A favorable purchase price for the car can have such a positive effect on the deal that even high mileage drivers will benefit.
4. Turning it in Early – If at the mid of the car lease period, the lessee feels that he will certainly exceed his allowable mileage and doesn’t want to face the extra charges, he can always end the car lease term earlier or he can find someone to assume the lease for him (someone who is looking for a short-term car lease options). There are a lot of car dealers who specializes in car leasing assumptions.

About 20% of new-car transactions are leases, as interest rates rose, car manufacturer’s shifted incentives from rebates and low-interest financing to leases. However, often car leasing gets criticized and it’s understandable since “car leasing” has enough jargon that can practically confuse anyone who don’t have a slightest history in finance. Plus dealers in the past have slipped bad deals with confused car buyers who simply wants low monthly payments.

To fully dissect what car leasing is, this article will discuss the common myths associated with car leasing that most people have fret over the past.

1. Buying is cheaper than leasing. Buying a new car has it’s advantages while opting to lease the car has its own set of vantage points. To buy a car or to lease a car depends primarily on the driver’s needs. There are at some point wherein buying can be a better option such as when the driver needs to drive more than the allotted 12,000 miles a year (in leasing – the gas mileage is limited).However if you loaned a car and then planned to trade it in before all of the loan is paid off, the value of the trade-in will unlikely cover the remaining balance of the loan.

   To help you decide, its good to lease when you’ll use the car for 2 to 3 years and annually consume less than 12,000 miles. However if you plan to keep the car longer than 3 years and know that you’d be consuming more gas mileage then buying can be the best thing.

2. It’s nearly impossible to negotiate a lease. As a matter of fact, leases are negotiable. But first you need a tour of the jargon so that you’d better understand the basics of negotiating a lease:

   Capitalized cost is basically the price of vehicle. You should haggle over this just as hard as you would if you were buying it.

   Money factor is also called lease factor or even a lease fee, this is the interest rate you are being charged. It is expressed as a multiplier that can be used to calculate your monthly payments. For example, 7.2% interest, when expressed as a money factor, is 0.0030. To convert a money factor to an interest rate, multiply it by 2,400. To convert an interest rate to a money factor, divide by 2,400. (Always use 2,400 regardless of the length of the loan.)

   The lower the number, the better. Car dealers are sometimes reluctant to share the money factor, so be persistent.

   Residual value. Finally, the residual value is the value of the vehicle at the end of the term. The higher the residual, the lower your monthly payments however it can manacle you.

    A more realistic residual value will make it easier to sell the lease, trade your vehicle mid lease or buy the vehicle at the end of the lease.

   Ask the dealer to show you several deals from various banks, focusing on the money factor and the residual value of the car lease.

3. Only businesses get a tax break. Tax laws allow businesses to deduct the monthly payments as an expense however individuals who used their leased car for business can deduct percentages of their lease payments, repair and insurance costs from their income taxes as well.
4. Turning in the leased car can dent a man’s wallet. In car leasing, once the driver exceeds the allotted gas mileage, he is charged a penalty fee for the excess around 18 to 21 cents per mile. However if you opt to buy a car, the car owner is also penalized for higher-than-average mileage when trading it in.

   To prevent from exceeding the allowed mileage, you can probably negotiate a higher limit in exchange for a higher monthly payment and still save money.

6. If you want out early, you’re stuck.You can actually terminate your car lease at an earlier date if you wish by transferring your existing car lease  to someone who can take it off your hands. There are a lot of websites online that match people who wants to get out of their lease early with those individuals seeking for short term car leases.

So you see leasing is not at all bad as others would purport it to be. If you, as a lessee, know what you want and negotiate smartly, car leasing can be a great deal.

At the end of your lease, you might decide you want to buy your car and keep it. Below are several reasons that might influence the lessee’s decision to buy out the leased car.

• The buy-out price as agreed in the contract makes buying the car a great deal.
• You know the car’s mechanical history and you know how reliable the car is.
• You don’t want to embark on starting a new lease or shopping for a new car.
• You’ve exceeded the allowable mileage and want to avoid the penalty fees.
• There is excess depreciation (wear and tear) on the car and want to avoid extra fees.

The simplest way to buy your car is to check its residual value in the lease contract. If the present market value of the car is the same as the residual value, then this might be a good deal for you. 

Well the first step when you want to buy out your leased car is to contact the car leasing company and inform them that you want the buy-out amount of your lease vehicle. The buy-out is more or less different with the residual value since your security deposit is deducted.  If you want to buy-out your leased car even before the end of the term, the buy out amount will be for that date and not the end of the term.

Negotiating to lower down your buy-out amount is possible however you have to be dealing with the person who has authority to make a deal. Deliberate in your mind when on the negotiations you’d like to make, below are tips on how to arrived at your desired figure.

Assume that if the lease car is returned, the leasing company will have two options to dispose of the car:

1. Let a dealer put the car up for sale as a used car, or
2. Ship the car to an auction and accept the wholesale price.

If the car is shipped to an auction, the leasing company has to pay an auto transport company to move the vehicle, and accept whatever is bid for it.The amount will likely be below the residual value of the car which actually puts you in a good position to negotiate.

Call the car leasing company and make your offer. They will either give you their counter-offer or ignore you completely, nonetheless just leave your contact number and give them time to call back.

When you are finally negotiating with the car leasing company, don’t recount that you went over the allowable mileage or there is an excess wear and tear on the car. If they know this they might demand a higher price for it.

Allow several weeks to negotiate a buyout figure for your leased car however if the negotiations look it can take longer,  arrange for an extension of the lease.

Opting to buy your at the end of the lease is a win-win situation for you and the car leasing company. Just make sure that both you and the leasing company have reached a fair deal for the buyout and orient yourself with the other related fees before signing the deal.

There may be circumstances in life where you will need a vehicle for a certain period of time, and don’t want to get locked into a long-term payment. Depending on your situation, short-term car leasing may be the best and most affordable solution.

Long-term car rentals are often the proper step if you need to drive a vehicle for just a short period of time. Car rent term can quickly get expensive, even with long-term rental discounts. However, if you will only need the car for six months or less, then renting is probably your best option.

If you are looking to keep a vehicle for a longer period of time, let’s say 6-24 months, then short-term leasing should be something you should consider. Unfortunately, this is not usually possible if you are looking to lease a new car. Most new car leases are at least 24 months or longer, so going directly to the dealer for a new car lease will only be a choice if you can commit to something more permanent.

The best solution for a 6- to 24-month use is a short-term car lease. Short-term car lease actually lets you take over or assume a lease, on a used vehicle from another driver. You’ll take over the auto, the monthly payments, and the time that is left on the lease, which can usually be from a few months to 2-3 years.

Short-term leases are often great bargains. Unlike a new lease, you will not have to come up with any sort of down payment or additional fees; you will just take responsibility of the payments each month.You must familiarize yourself with the leasing contract and the condition of the car since, in most lease terms, if you exceed the allowable mileage, you are usually charged at the end of the term.

Assuming a lease, even for a short duration, does require completing and changing the existing lease contract through the leasing company. If you may need the vehicle relatively quick, like right now, make sure all the paperwork is complete before you take the vehicle, in order to avoid any trouble in the end.

The best place to find short-term car leasing is on the Internet. There are a handful of specialized companies that match buyers and leaseholders together, and help facilitate the transfer of the vehicle. By going through a third-party company, you will have to pay a small fee, but you will increase your chances of getting a good lease deal and having the transfer done properly.

Short-term leasing may be the most practical way to meet your driving needs, especially if your finances do not allow for a large down payment. If you are in a situation where you need to drive a vehicle for at least 6 up to 24 months tops, you will probably get a great deal going through a company that specializes in lease assumptions and transfers. You can find a lot of stuff online, and by doing some research, you should be able to find plenty of lease deals that will suit your needs.