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1. Introduction to
Auto Leasing and Auto Lease Programs:
At the Auto Lease Consumer's
Advocacy Bureau (ALCAB), our mission is to provide potential Auto Lease
participants with the knowledge essential to making the most appropriate choice,
which, subsequently, empowers and encourages consumers to become more involved
in the facilitation of their Auto Lease Program.
At ALCAB, we are not opposed to
leasing in any way, shape or form. In sharp contrast, we believe that
leasing a vehicle might be the best decision you could ever make. We
encourage consumer's to learn more about why they should consider an auto lease
program. That being said, our intention is to provide insight to help you
make the decision that is best for your individual circumstances.
In the following articles, you will
learn valuable information regarding auto leasing and auto lease programs.
And, in the links which follow the
articles, you will find some additional information regarding auto leasing and
auto lease programs, from a few of the web's most trusted sources.
In addition, for information
regarding auto leasing as an alternative to buying, please, visit our
frequently asked questions
section.
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2. Advantages of Auto Leasing:
-
lower monthly payments
-
little or no down payment
-
drive a more expensive car for
less money
-
keep more of your cash available
for investments or other purchases
-
your sales taxes can be paid over
the term of lease
-
increased potential for tax
benefits - consult with your accountant or financial advisor
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3. Disadvantages of Auto Leasing:
-
no equity/ownership in the vehicle
(this can also be perceived as an advantage; as, with an auto lease, you have
elected not to invest money in a depreciating asset)
-
possibility of early termination
liability (as with financing)
-
potential end-of-lease costs such
as excess wear and tear and additional mileage charge (the same
characteristics which would lower the resale value of the car in a purchase)
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4. Types of Auto Lease Programs:
Closed-End Auto Lease:
With a closed-end auto lease program, you pay for
a predetermined number of lease payments for the period of time allocated in the
lease program and return the vehicle at the end of this term.
Barring any physical damage to the vehicle, excess wear and tear, or any excess
mileage beyond the mileage allocated in the auto lease program, you have no
further responsibility for the vehicle's value at the close of the lease. With a
closed-end lease, any loss of value caused by the depreciation of the leased
vehicle is the responsibility of the leasing company.
Open-End Auto Lease:
With an open end auto lease program, you assume a risk based on
the possibility that, at the end of the auto lease term, the vehicle will
maintain a market value similar to the value specified in the auto lease
contract, which is more commonly referred to as an estimated residual value.
If
the amount the car is resold for is equal to the estimated residual value, you
will owe nothing. If, however, the actual market value of the leased vehicle
differs from the amount specified on the original auto lease program, you may
owe all or a portion of the difference, often called an "end-of-the lease
payment." The Federal Consumer Leasing Act provides a degree of protection for
consumers in open-end leases by imposing a limit on the end-of-term liability to
no more than the total of three monthly auto lease payments.
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5.
Know your rights and responsibilities
The Federal Consumer Leasing Act and
some state laws may provide you with additional consumer rights. For information
on these laws, contact your state's consumer protection agency or Attorney
General's office.
When you lease a vehicle, you have
the right to:
-
use the vehicle for the duration
of the contracted term and allocated number of miles
-
turn the vehicle in upon
termination of the auto lease agreement, pay any end-of-lease fees and
charges, and be free from any additional responsibility
-
buy the vehicle, if your auto
lease agreement specifies a purchase option
-
take advantage of any warranties,
recalls, or other services that apply to the leased vehicle
You may be responsible for:
-
any excess mileage charges when
you return the vehicle (assessed if the mileage exceeds the amount allocated
in the auto lease agreement)
-
excess wear charges when you
return the vehicle. The standards for excess wear, such as for body damage or
worn tires, are specified in your auto lease agreement.
-
early termination charges
(assessed if you elect to end the term of the lease before the time agreed
upon in the auto lease agreement.
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Link 1:
The Federal Reserve Board has compiled a simple consumer guide to vehicle leasing.
Click the picture below to view the 'Keys to Vehicle Leasing' guide.
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Link 2:
The Federal Citizen Information Center, based in
Pueblo, Colorado, maintains a list of publications, available online, on a
variety of related subjects including, car shopping, auto insurance and repair,
as well as the occasional article on auto leasing and auto lease programs.
Click the picture below to view their list of resources.
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Link 3:
The Consumer Action Website offers some basic information and tips
regarding auto leasing and auto lease programs.
Click the picture below to view the 'Cars - Leasing' guide.
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Link 4:
The Federal Trade Commission maintains a list of
articles, available online, which offer some useful information for consumer's,
regarding auto leasing and auto lease programs.
Click the picture below to view their list.
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Link 5:
The Consumer Information Center provides and article that gives consumers
advice about auto leasing vs. buying.
Click the picture below to view the article: 'To Buy or Lease: That is the
Question.'
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Link 6:
The State Attorney General of Washington, has compiled some basic tips and
advice for consumers, regarding auto leasing and auto lease programs.
Click this link for more information
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Link 7:
The State of New York has recently imposed new auto leasing guidelines and
rights for consumers.
Click the picture below for more information.
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