Car Leasing Advice during a Slow Economy

Car leasing advice for a bad economy begins with a warning - keep your hands on your wallet. In down economic times, car leasing is more expensive, dealers will push you toward long-term finance purchases and excellent credit will be required to get a lease. The following car leasing advice looks at why a bad economy affects leasing and offers several points to consider that can make leasing work to your advantage.

How the Economy Affects Car Leasing

When you lease a car, the total of your monthly payments over the life of the lease covers the depreciation on the vehicle. The difference between what the car is worth new and what the car is worth when you turn it in at the end of the lease period is this amount. In a down economy, the residual value of any used auto is lower because there is less demand for any auto purchase. Lower demand results in lower prices. That lower residual value means greater depreciation and higher lease payments.

Good car leasing advice recognizes that in bad economic times, you will also have to have excellent credit to qualify for a lease at all. Again, with lower residual values, the lease companies are exposed to greater risk. That results not only in higher costs but in tighter credit standers.

Consider Taking a Lease Over

In a time when car dealers are less likely to want to lease - making it more expensive - consider assuming a lease from someone already in a lease that originated in better economic times. In bad economic times, there are more people feeling financial strain and desirous of getting out of car lease payments. This advice for car leasing is to watch local classified ads or post one yourself looking for an individual wanting out of a lease.

Lease Less Expensively

One of the advantages of leasing is that you often get more car for the money as long as you don't mind consistently having a monthly payment and not having any car that you can own and trade in on a next purchase. However, in a bad economy lease payments typically rise so that that high-end car is costing you more, if you can get a lease on it at all. Common sense car leasing advice says consider leasing a less expensive car. You might have the same lease payment with a lower-end car, but at least you are still able to lease.

Consider New Lease Sources

Most leases are executed by large car lease companies or dealers. If these options become too expensive, seek car leasing advice from alternative sources. Local banks, credit unions and small lease companies often have more flexibility and will be more aggressive about getting your business. As always, local relationships can pay off.

Lease Alternatives

If car leasing has become too expensive as a result of a bad economy, the best car leasing advice might be to buy a car this time around. Dealers will be aggressive in discounting prices and in finance terms. Just be cautious about getting a payment you can afford by extending a loan beyond five years. Interest rates start going up with longer-term loans and it is easy to get upside down in a car, where you owe more than the car is worth.

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