05.31.06
Posted in General, Articles, Car Leasing at 3:48 pm by LeasingRus
Ok the ramifications of the GST reduction in Canada. There are concerns of new-car dealers and consumers about the impact in delaying the GST reduction until July 1, 2006. Consumers are anxious for the GST to be lowered to ease the burden of buying things like houses and cars and possibly even car leases.
The minister said that they realized the impact on lost sales of such big-ticket items (like possibly car leasing), but stressed that it’s not feasible for the government to alter its timeline in cutting the GST.
The government is working on a communication campaign to educate consumers on the GST reduction.Hmmmm, now what about new car purchases and leasing a car? New-car dealers need to educate consumers on what the lowering of the GST means from a financial perspective. Do consumers really save money by delaying their purchases until July? Are there advantages in buying today?
If you have delayed buying a new car or leasing a vehicle, decided to postpone even looking for one, let’s clarify some issues.
Anyone in the market for a new vehicle, there are compelling reasons not to delay their purchase until the GST comes into effect in July.
On a leased vehicle, the GST is applied to your monthly payments. Say you lease a vehicle today and your monthly payment is $350. The GST at 7 per cent is $24.50, and GST at 6 per cent is $21. See, immediate and rolling over impact of leasing a car now with the current state of GST. Then again, you may decide to get into a new car lease and later exit the lease - giving the remaining lease payments over to the individual taking over the lease - this may turn them off. If you opt to give them a cash incentive to take over a lease, well - this may suffice for the lease takeover.
Anyhow, that represents a savings of $3.50 a month. Apply that savings over two months, and you’re left with a $7 saving. Remember, on July 1, 2006, your lease payment will only reflect the 6 per cent GST.
Any new-car dealer in the GTA (Greater Toronto Area) would cover the extra $7, if it meant getting a customer into a new auto today, as opposed to waiting for a couple of months.
Keep in mind that as a vehicle ages, the buyback, or lease-end residual, drops approximately every three months. The lease special that you are offered today may not be available 60 days from now. Waiting until July could, in fact, make your leasing payment more expensive than today.
Here’s another reason not to delay your new-car purchase. Most consumers who buy or lease vehicles usually have a trade-in. If a trade-in that is appraised at $15,000 is applied to a $30,000 vehicle, the customer would realize a difference of $150 in tax.
Admittedly, $150 is $150, and most consumers would say that it’s better off in their pockets than in the government coffers. No argument here.
But if you need a vehicle today, and $150 is holding you back from making a deal, then try negotiating with your sales rep. You might be able to negotiate a higher value for your trade-in. Also, consider your options when buying and leasing if you were to sell your vehicle, or get out of the vehicle lease.
The bottom line: a car lease or purchase has to make financial sense, just as leasing a car. Don’t rush out and buy before you’re ready. But if you do the math, you realize that any savings in delaying your purchase are insignificant. Try the lease calculators available to figuire out your lease payments.
Don’t deny yourself that new-car experience if you’re ready to buy today. There are lots of great deals and excellent choices in all vehicle segments.
Res: Robert McMillan, president of the Toronto Automobile Dealers Association, is a new-car dealer in Toronto.
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05.26.06
Posted in Get out of a car lease, Car lease assumption at 4:46 pm by LeasingRus
What is an auto lease assumption? I’ve heard this question a few times by owners of car leases. It’s actually quite straight forward. A lease assumption is a 3rd party who takes over a lease from the original lessee, under the same terms and conditions outlined in the original car lease agreement. So basically, if you currently lease a car and seeking to get out of a lease, you may want to consider a lease assumption. To find someone to “assume” your car lease, there are a few good online auto lease markplaces where you can post your lease for take over, and contact lessors to take over the lease. Typically, an auto lease assumption means the original lessee walks away from the vehicle lease without any future liability. The person taking over the lease, assumes total liability for the new lease contract. And still, at the end of the car lease term, the new lessee may have the option to buy-out the car lease agreement.
So when someone talks to you about lease assumption, remember, it’s simply an option where another individual can “assume” or take over your car lease agreement.
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05.16.06
Posted in Get out of a car lease, Transfer a car lease, Take over a car lease at 2:13 am by LeasingRus
Question: I still have 15 months left on my lease with the option to buy at the end of the lease. I would like to get out of the lease and trade out now and have found a dealer that is willing to pay the last 15 pmts, the over the mileage the disposition fee and early termination fee. However the lease company will not except that along with the auto they told me if I did the above that It would be like a voluntary repo and would go against my credit. What if anything can I do?
Answer: Dealing with leasing companies can be very confusing. Not everyone you talk to knows the policies of the company they are representing. Furthermore, some differences in state laws come into play. Still, we don’t know why your leasing company would not allow the trade that you have arranged. On the other hand, we don’t know why the dealer would agree to make the last 15 payments and pay the early termination fee. That’s a lot of money just to get you into a new car. Is it possible the dealer is telling you they will do this but they are saying something else to the leasing company?
May we suggest that you speak with a supervisor at the leasing company and verify exactly what it will take to get out of the lease. Get the supervisor’s name and number. Them talk with the dealer and confirm that this is exactly what the dealer is proposing. Or, you can try putting the remainder of your lease on AutoLeaseBusters (to get out of a lease), Lease Trader, Swap a lease, Lease Busters or others to see if someone else will make the remaining payments.
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05.15.06
Posted in Articles, Buying versus Leasing, Car lease assumption at 6:04 pm by LeasingRus
Is it time to buy your car lease? Did you know 3.1 million car leases expire this year (2002)? If you are part of that group The Early Show’s personal financial adviser Ray Martin says now is the time to buy out your lease. They don’t want to talk about it, but car dealers are desperate to unload these vehicles, which means that great bargains abound. The alternative is to break your lease early and transfer the auto lease to another consumer seeking to take over the lease. You have options!The math of leasing a car is pretty simple. The carmaker guesses how much the car will be worth once the lease ends. This value is called the “residual” value. (You and I know it as the used car value; it’s the price that a leaser can purchase the vehicle for at the lease end, the “buy out price.”) Once the carmaker sets a residual price, the dealer who is leasing to the customer sets the monthly payment amount. This amount is based on the difference between the car’s selling price and its estimated residual value - the smaller the difference, the smaller the monthly payment.
Many customers love auto leasing because it allows them to drive a car they may not have been able to afford otherwise. As it turns out, however, leasing has not benefited automakers.
According to CNW Marketing Research, automakers lost an estimated $10 billion last year in the U.S. from lower-than expected residuals. Another group reports that last year, leasing companies lost an average of $2,914 on every car returned to them. That’s up from $2,550 in 2000.
Even if a car leasing company did not inflate the residual value, it is still being forced to take losses now because the value of used cars has dropped. Here is why: Auto makers managed to make leasing a popular option - leased cars comprised roughly 4 percent of sales in 1980 and over 30 percent by 1999. As leasers returned their vehicles to dealers, they created a glut of barely-used cars. This supply drove down the price. Thus, a 1998 Toyota 4-Runner whose buy-out price was set at $26,500 was only worth $23,000 last June.
The glut promises to continue as 3.1 million leases end this year, rental car companies pare back their fleets and drivers who binged on no-interest new car deals trade in their cars.
Also remember that when banks and finance companies take back a car at lease end, they typically sell it at a wholesale auction. At auction, dealers pay below retail prices, the companies incur a time delay in receiving the money and they must pay costly auction commissions. So, for many reasons, leasing companies would prefer that you buy out your lease or at least transfer the lease to someone else who is willing to take over the lease and buy it out.
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Posted in General Leasing, Articles at 5:27 pm by LeasingRus
LOS ANGELES - A lawsuit has been filed against Kanye West and his production company claiming breach of contract for not returning a Mercedes-Benz after its lease expired in January.
The lawsuit, filed Friday in Superior Court by Delaware-based DCFS Trust, said West’s Konman Entertainment leased a 2003 Mercedes G500 in September 2002, with the agreement calling for 39 consecutive payments of $1,295 a month.
As Konman’s president, West signed as lease guarantor, according to the lawsuit.
DCFS Trust claimed the luxury sport utility vehicle was not returned as scheduled and holdover fees were not paid.
Phone messages left Wednesday for the 27-year-old rapper’s publicist, Gabe Tesoriero, were not immediately returned. Konman Entertainment could not be reached because the firm has an unlisted phone number.
Kayne - trade up your lease - I’m sure there’s tons of your fans willing to take over your lease!
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