Archive for the ‘Luxury Car Leasing’ Category

Luxury Car Leasing

Wednesday, September 14th, 2011

Luxury car leasing has become one of most popular ways to drive more expensive luxury brand vehicles such as BMW, Mercedes, Audi, or Lexus. People who lease luxury cars are generally wealthier and part of higher income brackets. Many of these people could easily afford to drive these cars without leasing or financing, but most understand the value of money and therefore choose not to squander it on something that depreciates in value.

Car leasing has actually become more popular for luxury brand cars as opposed to the more average, less expensive car. The reason for this is quite simple. Most people who lease luxury cars are interested in paying as little as possible for a depreciating asset while driving a nice car for several years without much concern for maintenance issues. Although most luxury brand cars have very little or no car problems for at least the first few years, most car manufacturers offer generous warranty packages for the first several years of driving, which again makes leasing luxury cars a great option.

Leasing luxury cars is also a great choice for those individuals who have relatively high incomes to cover the monthly lease payments, but have little to no cash savings. Luxury car leases are available to anyone who has a decent credit rating and enough income to cover the monthly lease payments.

Luxury car leasing really isn’t much different than leasing inexpensive, everyday cars. The only difference is the potential customer and his needs and expectations. Most individuals who lease luxury cars are professionals with high incomes. This means that they typically do not go to dealerships to look for the best deals possible. They are more interested in doing business with a dealership that is ready to provide top-quality service so they can return to the same dealership in the future.


Tax Benefits of Leasing a Car

Friday, September 2nd, 2011

You often hear people talk about the tax benefits that are available to individuals who lease vehicles. Many people claim tax deductions or tax write-offs on their federal income taxes by leasing cars. Generally speaking, if you leased a car that is completely or even partly used for business purposes, you can significantly reduce your tax liability.

How Do You Figure Out Your Tax Deductions?
According to the IRS, there are two specific ways through which you can claim deductions on car expenses or more specifically, car leasing expenses. The first way is to use what is known as the standard mileage rate. With the standard mileage rate, your deductible expenses are calculated based on the number of miles your car was driven for business. The second way is by using actual expenses. Here, you determine tax deductions according to the amount that your car was used for business.

Here is what the IRS specifically mentions about car lease tax deductions:

“If you lease a car, truck, or van that you use in your business, you can use the standard mileage rate or actual expenses to figure your deductible expense. This section explains how to figure actual expenses for a leased car, truck, or van.

Deductible payments. If you choose to use actual expenses, you can deduct the part of each lease payment that is for the use of the vehicle in your business. You cannot deduct any part of a lease payment that is for personal use of the vehicle, such as commuting.”

Consult a Tax Advisor or an Accountant!
While the IRS does provide specific details as to how you can deduct car lease expenses on your taxes, this information can be complicated and obscure. If you would like to learn more about the tax benefits of car leasing, you should consult a reputable tax advisor or accountant.

More Information about Tax Benefits of Leasing a Car
If you would like to read more specific information about the tax benefits of leasing a car, visit the section of the IRS website that deals with business transportation expenses here.


Does the Manufacturer’s Warranty Cover Oil Changes on a Car Lease?

Thursday, July 28th, 2011

Many people who are interested in leasing a vehicle often wonder whether they will need to pay for oil changes if they actually end up leasing. For the most part, most auto warranties provided by car manufacturers do not cover oil changes. An oil change is generally considered part of a car’s standard maintenance, which means that you will have to foot the bill. However, some auto companies such as BMW offer very generous maintenance packages that provide free oil changing services as well. What you should do prior to signing a car lease contract is to ask the dealer specifically about the coverage provided by the manufacturer’s warranty. You should also ask your dealer if wear and tear items, such as brake pads or air filters, are covered under the warranty.

5 Reasons Why You Probably Should NOT Lease a Car!

Thursday, July 28th, 2011

While leasing a car can be a great way to drive a brand new car for several years, it may not necessarily be the best option for everyone. What follows are 5 reasons why you should avoid leasing a vehicle.

1. You should NOT lease a car if you have bad credit. If your credit score does not equate to a “good” or “excellent” rating, your credit score is not as high as it should be. Unless you cannot wait several months in order to improve your credit score, it would be in your best interest to avoid leasing a car. If you do lease a car with bad credit, you will end up with a monthly payment that is higher than what can be considered a fairly good deal. Many of the special advertised lease deals offered by dealers or auto makers are often only available to those customers who have a tier 1 credit rating. A tier 1 credit score is one that typically exceeds 720.

2. You should NOT lease a car if your career or lifestyle involves frequent trips or traveling. Some people tend to take frequent trips outside of their city or state of residence for reasons that often have to do with their career or business. If this applies to you, you should probably avoid leasing a car because you probably won’t be driving the car enough in order for the monthly payment to be worthwhile.

3. You should NOT lease a car if you plan on modifying it. Many people, younger drivers in particular, like to accessorize or modify their vehicles by tinting windows, adding spoilers, replacing exhaust pipes etc. While modifications to your car may provide the car with improved performance or a more attractive appearance, keep in mind that any car that you lease is not actually yours. If you plan on returning a leased vehicle to the dealership at the maturity date of your lease (the end of your lease term), you must return it in its original form.

4. You should NOT lease a car if you drive too much. With long commutes to work or school becoming more and more common, people are driving more than ever just to get to work or school. When you lease a car, you are allotted a yearly mileage limit. This limit is typically 12,000 miles per year or 15,000 miles per year. Of course, you can exceed this limit but you will be charged a certain dollar amount for every excess mile. The amount you are charged varies from one car to another. For example, the excess mileage charge on my 2010 Honda Accord is 15 cents per excess mile. This may seem like a negligible amount, but a few thousand excess miles per year will add up to hundreds or even thousands of dollars by the end of my lease.

5. You should NOT lease a car if you plan on driving it for more than 3 years. With the length of most car lease terms hovering around 3 years, you won’t be attached to the car for a very long time. Of course, you could choose to buy the car after the term of your lease has ended, but this is a less popular choice for lessees.

Leasing a Car vs. Financing

Saturday, May 1st, 2010

Most people aren’t even aware of the fact that there are certain advantages to leasing a car compared to financing it. Many people think that it’s really a bad idea to lease as they have heard it from their friends or from those that they know. If you don’t know the advantages of leasing, then we suggest that you take a look at the advantages that it can offer you.

If you think that you drive less than 15,000 miles in a year and even have a safe place to park the car, then leasing would work just fine for you. Leasing is the way to go if you are looking to use the car for a short period of time. The typical lease installment runs for 36 months. Now the lease amount is calculated on the price of the car minus the residual value of the car. The residual value of the car is the price that the car dealer is going to get when they sell it at the end of the lease period.

For this reason, the lease value on the car works out to be a cheaper option than financing the car. You can lease a new car and pay far less than you would pay if you were financing the car. Moreover, you can even return the leased car before the bumper-to-bumper warranty on the car expires and it gives you mechanical trouble. At the end of the lease term, you don’t even have to worry about selling the car since you can just walk away worry-free. However you need to give the car back in the same conditions that it was received in from the car dealership. Leasing works better for a shorter period of time rather than a longer period of time.

Leasing means that you don’t need to pay any upfront charges unlike the finance option. The lease amount is that portion of money that is paid for when using the car for a specified period of time. Remember that leasing is not the same as renting. You don’t necessarily have to make a down payment but you would need to make monthly payments for the period that you are using the car. Moreover, you also have the option of buying the car at the end of the lease term period at the depreciated value.

To give a simple example, if the car costs $30,000 and is estimated to have a resale value of $18,000 at the end of 3 years, then the lease amount would be paid on the difference i.e. $12,000. As a lessee you would be making lease payments for $12,000 calculated on a monthly basis. Note: there are other fees including the finance fee and sales tax included in your monthly payment, but the depreciation is most of what you pay for over the term of the lease.

If you were to finance the car, you would be making a down payment for the entire $30,000 and then make monthly payments for the rest of the money for the entire period of the loan. If you were to rent the car, you would simply pay a rental value on the car. This is how all the three concepts would work. For this reason the leasing option is cheaper than financing the entire car.

It works well for those who are looking at changing their cars every 2-3 years. However, the need can vary from person to person. Lease payments have two parts. The first part is the depreciation charge or the depreciation value during the term of the lease and the second part is the finance charge, where the lessee will pay interest on the lease amount.

If you miss any of the lease installments, it will show up on your credit report, so it’s very important to make all the payments on time as well. Leasing doesn’t allow you to build equity on your car.

When a person is financing, they will need to make a down payment and also pay interest on the principal amount also. You will build up equity in the car and this works well for your credit report also.

When you finance a car, it can become expensive to pay the instalments at the end of 5 years especially when the car has depreciated quite a bit. Yes, it can become difficult for a person to pay $700 instalments even after 5 years. It’s like putting money in a loss account. However, you save money when you lease a car as, the charges are much lower and you don’t need to pay interest for the full purchase value.

Why Do Car Manufacturers Offer National Special Lease Deals?

Monday, April 19th, 2010

Obviously dealers are not in business to lose money. The nationwide lease deals that you generally hear about on the radio or on television are designed by car manufacturer’s to help dealers sell the cars on their lots to open up space for new inventory. They may or may not be good deals. But, anytime sales have been down for a while or whenever old inventory needs to be sold to make room for new inventory, car manufacturers will come up with special lease deals. Car manufacturers have two things in mind whenever they come up with national lease deals:

1. To make the advertised national deal seem like a good deal even if it really isn’t.
Dealers are looking to sell as many cars as they can and an obviously good way to do that is by making you believe that you are getting a fantastic deal just because a “special” nationwide deal is being offered. If a customer signs on the dotted line just because he or she believes that a special nationwide deal is automatically a great deal, the dealer just saved a bunch of time by avoiding any negotiation. This leads us to the other idea that dealers have in mind.

2. To reduce the amount of negotiation for the best car lease. What’s the point offering special deals if customers will not accept them as good deals? If the manufacturer has a special lease deal for a particular car, the dealer will mention it if you express interest in the car. If you try to ask for a better deal, he will often tell you that he is already selling you the car at a loss. The goal is to lease out these cars to customers who know that they are getting a great deal and who therefore do not try to beat the advertised special.