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Leasing a car - How it works?

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Leasing a car - basics on how it works:

Car Lease is basically a "car rental" except you'd have to maintain a car you're leasing.
If you lease term is shorter than a car warranty - most (if not all) work is done on a car under warranty.
In case of an accident - you will be covered by car insurance.
If car is stolen or totalled - Gap Insurance will cover the price difference in car value at the time of the loss.

By lasing a car - you are paying the difference between car's "Gross Capitalized cost" - an agreed price on a brand new car
"Residual value of the car" at the end of the lease.

On the top of the above value difference - you'd have to pay taxes, finance charges which will include interest on a depreciation value, processing fees etc.
Excessive wear and tear fees will be collected at the end of the lease - extra dings on the exterior, worn tires etc.
If car is not maintained properly (i.e. no records of oil change, tire rotation, scheduled visits to dealer for checkups) leasing company may charge additional fees at the end of the lease.
Lease may also include Dispposition charge - fee on returned vehicle, dealer processing fee for returning a vehicle at the end of the lease.

Lease usually has the following charges: Simplified Car Lease Checker

Gross Capitalized Cost Price of a car - negotiate this price down as much as possible.
It includes destinnation, preparation and other dealer's pre-sale charges.
Capitalized Cost Reduction Downpayment, trade-ins, any credits that could be applied towards lease.
Adjusted Capitalized Cost Price of a car after deducting "Capitalized Cost Reduction" from "Gross Capitalized Cost"
Adjusted Capitalized Cost = Gross Capitalized Cost - Capitalized Cost Reduction
Residual Value Car value at the end of a lease.
The higher value yelds smaller monthly payments.
Depreciation amount Calculated as:
Depreciation amount = Adjusted Capitalized Cost - Residual Value
Rent/Financial charge Includes finance charge based on your Credit Score, leasing company profit, processing fees etc.
Taxes Taxes are different from State to State. In some states tax is charged on a full price of a car while in others only on a car value difference.
Taxes could be factored-in monthly payments or paid at the beginning of the lease.
Disposition/Return Fee Flat fee you pay when vehicle returned at the end of the lease.
This fee paid on the top of excessive wear and tear charges, over the limit mileage charge and any other over the limit of a lease fees.
Over the limit mileage fee Usually lease assume 12,000-15,000 miles per year. Mileage over the limit usually charged at 12-15 cents per mile.

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