More
Options Than Ever
"You can look at leasing today as another
form of financing, but one that enables
you to pay lower monthly payments over
a shorter time period. Leasing also
lets you either purchase the car at
the end of the lease period - when GST
and PST taxes are then applied on the
residual value of the vehicle - or lets
you simply return the car.
"You don't own, or owe anything if the
manufacturer takes the car back - and
you are also free to start a lease on
a new vehicle. There are mileage penalties
to consider - usually from about six
to ten cents per kilometre for mileage
exceeding 25,000 kilometres per year.
But that is not all that punitive, considering
that an extra 10,000 kilometres annually
will cost about $600.00," Riley says.
Most importantly, Riley points out that
manufacturers base lease payments on
the depreciation of the vehicle during
the lease period. If a manufacturer
guarantees that a $30,000.00 auto will
still be valued at $20,000.00 at the
lease end, the payments will be based
only on the $10,000.00 in depreciation
over this two- to three- year period,
plus interest on the depreciating vehicles
value.
"Also keep in mind that the manufacturer,
not the consumer, bears the residual
risk. In other words, if a vehicle's
value at the end of a lease is less
than what the manufacturer originally
guaranteed, it's not a problem for the
consumer. You basically pay as you go
- and that includes taxes. Because of
the short terms involved, you get the
added value of warranty protection."
Riley cautions prospective lease customers
that just as in a purchase situation,
regular maintenance - brake wear, oil
changes, etc. - not covered under the
warranty are still the consumer's responsibility.
"Some people mistakenly think that all
maintenance is included free in a lease
deal. Simply apply the same principal
as in purchasing and you will get an
accurate picture of your obligations."
*
Article from MacLean's Magazine by,
Craig Riley, President, Markville Ford
Lincoln, TADA Member. |
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