Auto - Buying and Insurance
Thinking about a Car Lease? Things to Consider
The finances of car leases are somewhat convoluted, so it's hard to compare financing costs. The costs in some leases are loaded up front, while the costs of others are loaded on the back-end. Be sure to compare apples with apples.
Lease payments are typically lower than auto loans; however, you need to factor in the cost of owning nothing after your lease term expires.
Lease payments can be lowered by increasing the front-end costs or by increasing the residual value of the car, both of which can increase your overall costs.
A higher residual could cost you a bundle out-of-pocket if you get in an accident. The replacement cost your insurance company may be willing to pay may be much lower than the residual value.
If you drive more than 15,000 miles a year, the additional mileage could cost you as much as 15 cents a mile. Some leases allow you to “purchase” additional mileage. Either way it will increase your overall costs.