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Car Leasing Tips
Car Leasing Explained: How To Lease A New Car And Avoid Dealer Scams

  • What car leasing means, how it works, advantages and disadvantages of car leases

  • We'll review the best free discount new car quoting web sites like InvoiceDealers, Cars.com, Yahoo!Autos, Autos.com, Edmunds.com, MyRide.com and CarsDirect, to get you new car price quotes

  • How to get out of your car lease via an early lease termination without paying any penalties

  • Swap a lease strategies: How to use sites like Swapalease.com and LeaseTrader.com to transfer your car lease

  • Our free car lease calculator Excel spreadsheet download to help you make informed decisions on auto leasing

  • Reviews of car lease calculator tools Expert Lease Pro and Lease Wizard

  • Who should not lease a car

It does not matter whether you lease or buy the car, it still depreciates the same 50% in 36 months.

What Car Leasing Means
Instead of buying a new car with a bank loan, you rent or lease the car for 3 or more years then give it back to the leasing company at the end, with a residual value of about 50% of when the car was new. Auto leasing is a way to drive more car than you can afford and change cars every 3 years without hassles or trading in. If you understand all the terms as I explain them, and study the sample exercises in this article, you will be poised to negotiate a value added lease. But overlook one detail or forget to check their math, you'll lose your shirt. I'll show you how to be a proactive deal maker and level the car leasing playing field. When you lease a car, the dealer sells the car to the leasing company who leases you their car for 36, 48 or more months. The dealer handles all the financing paperwork in the lease, you usually don't talk to anyone at the leasing company at all. When we talk about the dealer financing your lease, we are referring to their handling of the paperwork on your behalf, you normally are not leasing a car from the dealer, but from the leasing company.

The leasing company can be a bank, the car dealer, or a car manufacturer like Ford Motor Credit. The selling price to the leasing company is often called Capitalized Value, or Gross Cap Cost. You can reduce your monthly lease payments by reducing the cap cost. This is called cap cost reduction, and can be accomplished by haggling a lower selling price, and by putting down cash to reduce the cap cost. Your monthly lease payments when leasing are lower than your car loan payments would be when buying the car, because you are paying off only 50% of the car's value on a lease, and paying off 100% of the value on a car loan. In an auto lease you are only paying for approximately 50% depreciation + interest, but at the end of a 36 month lease you have no equity in the car, you've paid hundreds in useless in dealer acquisition and disposition fees, and now you have to do it all over again on your next lease. Had you bought the car with a 36 month loan, then after 36 months you'll have $15,000 equity in a $30,000 car, but now you have a used car that you need to sell or trade in order to buy another car. A Vehicle depreciates the same 50% over 3 years whether you buy it or lease it.

The fact that your monthly payments are lower with a lease does NOT mean you are getting a better deal than buying!

Competitive car lease quotes give you lowest lease payments

How to deal directly with your auto leasing company

Auto Leasing Direct allows you to lease directly from the car leasing company thus eliminating dealer mark-up on the financing terms. Talk directly with leasing companies who have agreed to provide competitive leasing on select makes with full disclosure of terms directly to our visitors, all without the hassles and scams found at some dealerships. There is no cost or obligation for you to participate.

You don't have to accept the first car lease payment the dealer offers you. Try Lease Wizards's Live Lender Quote, giving you 6 lease quotes from major lenders in your area, with actual residual values, money factors, fees, mileage allowances, the same information the finance manager has on their computer. If the dealer tries to charge you too much, show them your quotes from up to 6 vendors and make them beat the price. On Lease Wizards's site, choose "L.L.Q. Center".

Empower yourself with lease payment quotes, don't be a victim of your next auto lease
DON'T BE MISLED by services that claim to provide you with comparative quotes. Look closely. Do you see a list of lenders? Probably not. Do you see a credit application? Probably so because the same service that is giving you a quote is trying to lease you a vehicle! That means the quotes you see represent the terms on which THEY will lease you a car, and NOT necessarily what the most competitive lenders in the market are offering through most any dealership. Click here for more info on getting leasing quotes.

Should you buy your leased car at the end of the lease or should you dump it?
Many people ask me if they should buy the car at the end of the lease. Usually the end of lease purchase price, known as "Residual Value" is $3k -$4k more than actual market value of the car. Smart shoppers know the buyout price is thousands over market value, and will turn in their leased cars to the leasing companies instead of buying. That caused used car values to tank unexpectedly in 2001-2003. Many people forget there is also a $300-$400 non-negotiable "purchase option fee" buried in your lease contract if you buy the car at the end of the lease.

Your strategy: I would wait until the end of your auto lease and ask the leasing company if they will sell the car for less. Offer less than market value for the car. Many leasing companies are arrogant and still play hardball. If you leased and took it on the chin going into your lease or if your gross cap cost was MSRP, don't give them one cent more. If they don't budge on the buyout price, exact your revenge on them by dumping another used car on them where they will lose $2000-$4000. Don't let them scare you with threats over mileage penalties, or non-matching tire fees, it still beats paying $4000 over market price for a car. They'll call you in advance to pressure you to buy the car at lease end. Research the value, dodge their calls, and show up at lease termination with a check in the amount you want to pay. Haggle smartly, telling them you know used cars are worth a lot less now. With no sale they have to dump the vehicle at auction. Don't pay them until they sign a buyer's order first! If they reject your offer, walk away, game over. Now they have no time to strategize, the deal is over and you pinned them against the wall. Maybe they'll chase after you before you drive out to give you the lower price, but if not, just keep on driving with a grin on your face.

Watch out for mileage limits!
Most leases crossing my desk sent in by our visitors limit you to 12000 miles/year, I've also seen some as a low as 10,000 miles. Many people end up owing thousands in mileage penalties at the end. The better car leases will allow you 15,000 miles per year. Some dealers arrogantly email me what an idiot I am for pointing this out, and they try to Jedi mind trick you into buying your excess mileage ahead of time to protect yourself from over mileage penalties. But the this is an icing on the cake scam, because if you don't use those extra miles that you paid extra for up front, you don't get your money back for them. So forget about falling for their tricks and "buying your miles up front". Just haggle with them to allow 15,000 miles per year on your lease, problem solved. If they refuse, then leave.

How to Terminate Your Car Lease and Avoid Early Lease Termination Penalties

Don't terminate your lease early, swap a lease instead! You got that BMW lease, or Honda Lease, or a Ford Lease several months ago, and you want out. Maybe you bit off more than you can chew, you got laid off, or have kids and suddenly the Accord won't cut it. Remember an auto lease is a contract, and early lease termination has stiff penalties, they usually want the remainder of the payments plus penalties. It makes no sense to terminate a lease early. They can ruin your credit and you won't be able to buy your next car. Most buyers don't know they are paying stiff penalties because car dealers mislead you with radio ads implying your obligation is gone once you trade in your leased car. What dealers really do is stack those penalties into the new car and spread out payments over 72 months so you don't notice, but the penalties are there, digging a deeper financial grave for you, now you'll be paying off 2 cars! Shift your strategy from terminating a lease early to a strategy of transferring your lease to another buyer via an auto lease trade. Use sites like Swapalease.com and LeaseTrader.com to transfer your car lease. It's your only salvation. They can do a car lease swap for you, and reassign your auto lease to another buyer. You list your car, there's plenty of buyers looking to get into a lease. They want your BMW lease, you already paid down payment, monthlies, and depreciation hit. To attract buyers, offer incentives like $100 cash to take over the lease. People love to get "discounts" or cash back. It works for carmakers. Here's some benefits:

  • With the car lease trade, a buyer takes over your car lease in their name, your name comes off the auto lease
  • No early lease termination penalties for you, your credit stays intact
  • It's cheaper than paying thousands in early lease termination penalties
  • You avoid car dealer scams, you are not trading in a car, you are giving it to another buyer

With so many confusing terms and variables, leasing provides unscrupulous dealers with a target rich environment of ways to sucker you out of your money. Analyze the numbers on one of your old leases with a car lease payment calculator, you'll find you should not have signed that lease. Your jaw will hit the floor when you find out how badly you were taken. Don't sweat it, after today it will never happen to you again.

Use proper car lease payment calculator tools to plan your lease

You should not lease a car without using lease software to help you make smarter decisions, or you are setting yourself up for a big loss. You'll know the lease better than the dealer so they can't outsmart you. I'll tell you where to find ALG Lease residual Values, and how to use them. View our Review Of Leasing Software that you can use to catch dealers padding your monthly payments. I'll give examples of common leasing dilemmas like excess mileage, losing your job, early termination, and moving out of state. You can also download my awesome free car lease payment calculator spreadsheet.

How to get Lowest APR Car Loans

If you buy your new car instead of leasing it, don't forget car financing is just another product a car dealer sells to you. Try sites such as Capital One Auto Finance and HSBC Auto Finance to find the lowest APR rates, lower than banks. If you have an excellent and substantial credit history try FirstAgain.com, they have very competitive rates for the top credit borrowers. You get approved in minutes for new car loans, or used car loans, they Fed Ex your check. You can apply today, and pay for your car tomorrow, it's that quick. It's a safe, secure way to finance your car in advance and avoid dealer's forced warranty and window etch loan scams. You better know what APR you qualify for before you buy.

Looking to buy your car at the end of your lease? Try financing it with FirstAgain.com if you have an excellent and substantial credit history.

Useful Quick Lease Payment Calculator:
Click Here To Try LeaseWizard's Online Quick Lease Calculator
. Use it to give you an idea of what you can expect your lease payments to be.


Back To Back Leases Cost you More in The Long Run
This is because you suffer 50% depreciation on a new leased car every 3 years. At lease end, bring the car back and buy it or lease another. It's similar to renting apartments where you have no equity instead of owning a house where you do have equity. Remember, a car is a depreciating asset whether you own it or you lease it. You still pay for depreciation whether you own it or lease it. Dealers trick you by stating leasing is a better investment than buying. No car is an investment, but I'd rather have 100% equity in a car after 3 years, than 0%. One of the biggest complaints I receive from readers is the car dealer pulls the old Jedi mind trick on you and says "the selling price of the car on a lease is not important". If they tell you that, they are lying. The selling price is the gross cap cost, and the higher the gross cap cost, the higher your monthly payment. Only an idiot believes that the selling price (gross cap cost) of a lease does not matter. You MUST negotiate a lower selling price on a lease, just like you would if you are buying the car. Do not fall for this scam.

Your Goals When Leasing A Vehicle

  • Get as low a capitalized value as possible.
  • Get as high a residual value as possible (If you're not buying the car at the end).
  • Get as low a money factor as possible.
  • Pay $0 down, $0 security deposit, $0 bank fees, $0 dealer fees.

Depreciation In A Lease
Depreciation is how much market value your car loses during the lease. It's the difference between the "capitalized value" (selling price) and the residual value (predicted value at lease end), supplied by the Automotive Leasing Guide (ALG) or equivalent. It does not matter then if you lease or buy your car, it still depreciates 50% in 36 months. So when a salesman tries to tell you that buying is a bad investment, he's forgetting that leasing is a bad investment too, because either way you pay the price of depreciation. Ignore those Jedi Mind Tricks. If you lease a $20,000 car and it's worth $11,000 after 36 months, you pay for the $9000 depreciation, plus interest. You want depreciation at a minimum, and thus your monthly payments at a minimum.

Leases don't have interest rates, they have a confusing form of interest called "money factor". Some unscrupulous dealers avoid telling you the actual selling price of the car, quoting only the monthly payments, so how do you know what kind of deal you're signing up to? Yes there are laws against this, but guess what, there are laws against bank robbery too, and look how many banks get robbed every year. Salespeople sometimes email me to tell me how stupid I am, that there's all these laws to protect you, but they are like ostriches with their heads in the sand. Dealers skirt the law all the time. This is why dealers push leasing so hard. It's easy for them to hide the fact that they gave you nothing for your trade-in after you spent an hour negotiating top dollar for it. Many people think the heck with it, their company is paying why should they have to negotiate? Why should your company have to give the dealer full MSRP? Why should you have to sit there and listen to a salesman saying "come on, your company is paying for it, what does it matter?" Don't tell the dealer you are leasing until you agree on a selling price. Negotiate the car down to a good selling price as though you're buying it. Then if you want to lease, the purchase price becomes the gross cap cost for the lease. Higher residual values mean lower lease payments.

MSRP - Manufacturer's Suggested Retail Price

While many salespeople are good, some live by this principle:

"It is morally wrong to allow suckers to keep their money."
Thanks to tricky lease terminology, dealers can agree to all your demands, then steal it right back. You negotiate the price of a $25,000 car down to $22,000. Now you think you are getting a great deal. The only problem is some dealers still skirt the law and fail to disclose this $22,000 "cap cost" (selling price) on the lease papers. Instead they use the $25,000 MSRP as the "cap cost" for their formula then show you only what your monthly payment will be, and not the selling price. Since lease payments are less than a loan to begin with, the payments are low and you are happy. On a 48 month lease, they packed your payment by $62 per month. If you speak up they make you feel guilty saying "We're saving you money here, you're paying less than you would on a loan. They just stole $3000 from you but you don't notice because it's spread out over 48 months.

Advantages Of A Car Lease

Disadvantages Of A Car Lease

Some other points to ponder before you lease a car:

People often want to get out of their car lease early
Dealers pay off your existing car lease plus lease termination penalties to buy you out of your current lease, then finance all that extra debt into your new car lease. You think the dealer is giving you something for a car you don't even own. They dipped you from one lease into another, now you are paying off 2 leases. This puts you in a far worse position than you were in before, even if your monthly payments drop, you will pay more in the long run. They to release yourself from the debt of a car lease is not by trading in the car for a new car, but by using Use sites like Swapalease.com and LeaseTrader.com to transfer your car lease to another car buyer. Then you are truly out of that lease.

Car leasing is a taxing issue!

Most states tax only your your monthly payment. But some states tax the full amount of the car even though you are only using up just 50% of the value before you return the car. Even worse, if you buy the car at the end of the lease, you again pay sales tax on that residual amount! While Texas does levy taxes on the FULL VALUE of leased vehicles a law EXEMPTS owners of these vehicles from paying taxes if they are primarily (more than 50%) a "personal use" (not used in the production of income) vehicle. Here is the link to the Texas tax code concerning property taxes.

The "purchase price" of your leased vehicle is critical! The higher it is, the higher your lease payments and the dealer makes more profit.

A large cap cost reduction (down payment) hides a bad lease.
Many dealers require huge down payments at inception. The fine print in a BMW ad listed fees and down payments totaling $5289! I thought the idea of auto leasing is little or no down payment. On the BMW lease ad, they divert your attention to the low monthly payment of $275, but let's add up how much the entire lease is costing us. You must amortize the $5289 down payment into the 30 months of the lease. This means your effective average monthly payments during the 30 month lease will be $275 + $5289/30 = $451 See what I mean? They mislead you into thinking your monthly payments are only $275, which is right, but it's actually costing you $451 because you are only focused on the low monthly payment.

Zero Down does not mean you owe "zero". It just means you don't have to put money down up front.
Some dealers mislead you "$0 down payment" ads. Your brain makes you think you don't have to put any money at all down, when in reality, it means the down payment part of your inception costs is $0. Confused? Remember, their definition of down payment is cap cost reduction. The other fees due at closing (i.e. dealer fees, acquisition fees, bank fees, add up to over $1000. So "0 Down" does not mean zero down. They can shift fees to the end of the lease in the form of disposition or termination fees, or into the cap cost. Closing costs should always be used in the calculations to tell you how much the entire lease will cost you.

You should NOT lease a new car IF...

  • There is a chance you'll end the auto lease early
  • You are upside down on your current car lease or loan
  • You plan to have kids next year and will need a different car
  • You drive more than 12,000 miles a year or you're a salesperson always on the road
  • You plan to move out of state. Most car leasing companies don't want their cars leaving the state, call them and ask
  • You mistreat cars, you'll pay dearly in excess wear and tear fees at the end
  • You live in states that tax you up front on the entire cap cost instead of pay as you go tax on monthly payments
  • You want to customize your car, make modifications, or paint it
  • You love owning cars, paying off your loans and driving cars into the ground like me
  • You don't completely, 100% understand leasing when you finish reading this guide

If you cannot fulfill every single payment of a lease, you should NOT be leasing.
Before signing a lease, be sure you are doing the right thing. Are you going to have kids next year and need a different car? A lease is a contract and if you break this contract, the penalties are stiff. You can have your credit rating tainted, meaning you'll pay more for your future cars, and higher interest. The lessor can sue you for breach of contract. Usually they just quote you the early termination penalty, which you are stuck with. There have been successful lawsuits against lessors accused of padding the early termination penalty, because you can't verify if the penalty is correct.

Let's Talk Finance

What A Low Credit Score Means To You
Your credit score is the single most important factor determining whether you'll get approved for a car loan, and what your APR will be. If your score is low, you'll pay extremely high interest rates on a car loan, up to 23%. Most people are also unaware that their credit score also affects how much you'll pay for car insurance rates too. Maintaining your high credit score should be an ongoing process, not a task you rush into when buying a car. In fact, that's the worst time. The reason is banks will reject you if you have disputed any item on your credit report, until it resolves in 30 days. It can take 60 days to clean up your credit score, so don't apply for any new credit until all disputes are resolved and you verified the FICO Score. You have been warned! I have seen people get rejected for applying while closing accounts. Right now, you should be asking yourself "How good is my credit score?"

What Should Your Credit Score Be To Get Approval For Car Loans?

  • If your credit score is above 680, you are considered a "prime borrower" by most lenders that we polled and you should get a good APR on your loan.

  • If your credit score is below 680, you are "sub prime", and will pay much higher APR on your loan. Below 550, you can forget about a car loan.
A dealer shouldn't know more about your FICO Score than you. Get yours now.
In 2001 it became possible for you to get your own Credit Score when you get your credit report online. Congress fought hard for your right to get at your credit score, so you better use it. Previously lenders kept this beacon score secret from you, so they could charge you higher APR. Get your Credit Score so dealers who run your credit report can't lie and say your score was low just so they can charge you higher APR. This happens all the time, and now you must use your power to stop it.

Where to get your credit score: Online from Experian, Equifax or TrueCredit. What was your credit score?


Common myths about your credit score:
A lot of fools think "I've never missed a payment. My credit is perfect, my score must be high!" This could not be more wrong. Many people get upset when after their credit score came in low. Paying on time is one of the best things for your FICO score, but it's only one of over 100 variables making up your credit score. But people with good credit tend to have too much credit, and too many old accounts still open that they never use. Lenders view that as a risk. When I got my score it was ok, but needed improving by closing half a dozen computer store and department store cards I no longer used, they were dragging down my score. Steps you need to take before you apply for a car loan:

Credit Unions:
If you're a corporate employee, school district, government agency, college, etc., you probably have a credit union. Credit unions can be easier on you than banks, they'll lend you more money at favorable rates, usually 2% better, but not as good as the car loan sites. Your credit union can approve you over the phone in minutes, printing your credit report during the call. They'll tell you what you qualify for. Some don't require a security deposit, down payment, other fees, and are generous with mileage. If you use a credit union, make sure there is no fine print that says they can put a lien on your home if you default on the car loan. The Postal Service credit union had this lien.

Don't Be Fooled By Lower Monthly Car Lease Payments, it may be more months.

Don't just focus on monthly car lease payments. A sneaky dealer will quote a lower monthly payment than your bank, but the dealer's auto lease is 39 months, and your bank's loan is 36 months. Don't fall for this common scam! Some dealers pack payments, so always check their numbers with car lease payment calculator tools! Try Expert Lease Pro and also LeaseWizard Auto Lease & Loan Analysis Kit.

If you can't check their numbers, you have no business taking out a loan!


Benefits Of Auto Financing on the web:
Dealers don't finance your car loan, they get a piece of the action from a bank. The higher APR they charge you, the more profit they'll make. Here's the benefits of getting your car loan from an online lender:

Where and when you buy is up to you. Be sure to get your credit report, and be sure it's correct. With your financing done, there's no need to endure the confusion and trickery of car dealer financing. With the check draft in hand, there's no finance scams that a dealer can pull on you as you have eliminated one of the shells in the cash flow shell game.

Are you buying instead of leasing? Use these sites to lookup interest rates and get your loan from the lowest APR site:

Best New Car Loan, Used Car Loan Sites
Where to check online auto loan rates
Capital One Auto Finance
Capital One Auto Finance 5.19% Capital One Auto Finance
Capital One Auto Finance

Capital One Auto Finance can give you lower APR with hassle-free auto financing, response in minutes. Bring your auto loan check to the dealer.

Click Here to Visit Capital One Auto Finance

FirstAgain AnythingLoan for Autos or Anything Else

FirstAgain.com online lending for people with excellent credit.

What you Need for loan approval:

  • 5 years of excellent and substantial credit history with no delinquencies, with a variety of account types (credit cards, mortgage, auto loan).
  • Minimum FICO Credit Score of 700 (Click Here To Get Your Credit Score).

How First Again works:

  • Apply online at FirstAgain.com for the amount you need to buy your car. Get email about your loan within minutes (during business hours).
  • If approved, sign your loan agreement electronically online, choose your funding and monthly payment dates
  • Funds transferred electronically, directly to your designated account. Go pay for your car.
  • Loans are completely paperless and unsecured.

Click Here to Visit FirstAgain.com


Auto Loan and Auto Lease Calculators

Read my online article about using the ALG Residual Values. You'll need this vital data to calculate your lease payments, and look up dealer cost for cars and trucks. Every person who leases should be using the same type of leasing software that the dealers use. Without it you're sailing the ocean of confusion, and they'll swallow you whole. I would never in a million years lease a car without using my lease software first.

TIP: When filling out the forms for your credit report or anything else online, remember to enter your full email address properly! If your email address is user@aol.com, don't just put "user", you must add the full "user@aol.com", or your request will be denied. They need to be able to email your report to you as a backup.

How To Get Your Credit Report Instantly Online

  • Experian Online Credit Reports A great place to get your credit report instantly online. You get a thorough credit report in 30 seconds from one of the big 3 credit bureaus. They are strict about security so if you type one bit of data incorrectly or have moved in recently, you won't be able to get your report instantly. Instead they'll mail it to you about a week later. We send all our friends and family there, because it's so easy to use.

  • Equifax Online Credit Reports Equifax is one of the big 3 credit bureaus in the U.S. Most creditors who run your credit profile use Equifax, as they are the most thorough. Usually when you apply for mortgages and car loans, many banks get your credit report from 2 of the big 3 credit bureaus, and Equifax is one of them. By using the same credit reporting agency as the bank, you'll be in sync with what they see. Inferior credit bureaus may not have all the information that the Equifax report has, and this could lead to you getting rejected on your loan.

  • TrueCredit lists your credit report online instantly. You can also have a merged report from all 3 credit bureaus mailed to your house in a few days. If you have never seen your credit history before, you should get the 3 in 1 merged report. Another great tool to have is your TrueProfiler credit score, I highly suggest you pay the $3 for it. The score is a numerical depiction of your creditworthiness, they explain the factors that influence your credit standing, and what items on your report are keeping you from getting approved. Until 2000 legislation, you were not allowed to see your score.

People With Bad Credit Or No Credit
How does bad credit hurt you? Dealers charge you 18% interest or more, while the rest of us enjoy 2% to 8%. Bad credit keeps you from opening a checking account! Banks run a credit check because they know people with bad credit bounce checks. The fact that you shafted all of your creditors is coming back to get you. I think every person should read Fresh Start, reviewed below. Most cases of bad debt are from pure ignorance. Don't live beyond your means! Plan your life with a budget that has a reasonable and sustainable car payment built into it. If you have bad credit, please don't email me asking what to do, I am not a credit consultant. Go check out the free consumer credit info site DebtWizards.Com instead.

Fresh Start: The Authoritative Guide To Consumer Credit Repair
If you have credit problems, you keep getting rejected for credit, or you have not established credit, you must get this easy to read Fresh Start book from Horizons Unlimited. We cannot say enough good things about Fresh Start the best debt resource we've seen, covering more topics related to your debt than anyone. It walks you through each of the remedies available to you to remove negative credit. Forget credit doctors who scam you out of $600 or more, this book shows you how to do it free yourself. There are great step by step tips on analyzing your credit report, disputing bad marks with credit bureaus, negotiating tips, common mistakes, laws that work in your favor, well written sample dispute letters, credit bureau phone numbers, web sites, and addresses, settling bad debts AND getting the creditor to remove them from your file. There's tips for people who default on government student loans, divorce & credit, bankruptcy, judgments, old delinquent accounts, credit card fraud, everything imaginable. This book is available from them as a CDROM, as a book, or as an instant electronic download. By ordering the download, you can start immediately and it's searchable.

You Cannot Borrow Your Way Out of Debt!

Consolidation loans are DANGEROUS for impulsive people because all you are really doing is shifting all your debt from one place to another, effectively OPENING ANOTHER CHANNEL OF CREDIT, while freeing up your credit cards. Some idiots then proceed to fill up their credit cards again, now they have double the debt they started with, and they are paying up to 22% on their consolidation loan because they weren't paying attention to the APR when they signed up. Some Loan companies are real unscrupulous and make it look like they are eliminating your debt, or they hide the APR from you.

First Time Buyers And College Students with bad credit
They have no established credit and fear they'll be rejected. Salesman program them by telling them "you'll probably be rejected". They tell you this is a good chance for you to establish credit, but it does not mean you have to pay a high APR. If you are a student working at the university, you may be able to get a loan through the credit union. Try there first, it's a great place for you to establish credit. Some students have their parents just buy the car for cash. This does not establish credit for you. You might be better off having them put down 20%, then you carry the remaining loan balance. Having a credit card under your parents' name does not establish credit for you. Pay down some of your debts and work on cleaning up your credit score before applying for a car loan. Try iCreditSearch, it is a credit search that finds a credit card for people trying to re-build their credit. Read and understand how the credit card operates.

Don't Forget Auto Insurance & Extended Warranties
Don't overlook this important part of car buying, you'll be in for a shock later. Get a quote on the car you want. You'll be surprised how much some new cars cost to insure. Insurers require a garage and alarm for Corvettes. Know your insurance costs before you buy a car, and plan your budget accordingly. My 25 year old friend pays $2400 a year for insurance on his 1997 Mustang, and the GT is even much more! That's $200 per month! This is where people make a big mistake, forgetting to include insurance in their budget. If you're buying a car on the hairy edge of what you can afford, insurance payments will drag you under. Insurance payments are part of your monthly cost of ownership. Read up on how to buy insurance, definitions of coverage, and how to avoid scams in our insurance chapter All About Auto Insurance. Auto insurance sites Comparison Market, GEICO and Progressive Auto Insurance give you free online auto insurance quotes, so be sure to get pricing from them too.

Extended Warranties
For extended warranties, try Warranty Direct. I review them in the section on How To Buy An Extended Warranty And Avoid Scams You want to get an online warranty quote before you go to the dealer, so you'll have something to compare the dealer's extended warranty price with. Never show up at a dealer to buy a car without a free quote from an online warranty site.

Know Your Car Before You Go Shopping!
Visit several internet sites and familiarize yourself with the car you want to buy, as well as the options available. I'll provide you with reviews of the free car pricing sites in the next chapter. Sites like InvoiceDealers, Cars.com, Yahoo!Autos, Autos.com, Edmunds.com, MyRide.com and CarsDirect etc. provide MSRP pricing of cars, as well as what the dealer paid for the cars, and any known factory-dealer incentives, or factory-consumer rebates. Print out all the MSRP, dealer invoice, and rebate information, to bring with you as you shop around.

Find out if there's a rebate before you go to the dealer!
Most people think that all cars have rebates. You'll only see a rebate on a slow mover where the manufacturer needs to stimulate sales. You'll never see a rebate on a hot selling car, because they don't have to offer one, the car is selling itself. Sometimes you choose a low lease rate in lieu of the rebate. Some dealers may try to tell you there is no rebate so they can steal it for themselves. If you do not verify there's a rebate, the dealer could claim that there is no rebate when there really is one.

Go To Part 2: Leasing Glossary

Jump to any section. I suggest you read each chapter in order.

Part 1: Car Leasing Intro
What leasing means, how it works, the advantages and disadvantages of leasing, and how to finance a lease.
Part 2: Leasing Glossary
Glossary terms used in leasing, and how they are used against you so you'll be prepared for decisions in leasing your dream car.
Part 3: Lease Examples
Real world leases with fees attached. A free Excel spreadsheet to calculate your monthly lease payments. How car dealers calculate lease payments.
Part 4: Web Sites To Use
Reviews of discount car buying sites, determine how much dealers pay for cars, how to get ALG lease residual values. How to price your trade-in.
Part 5: Leasing Scams
Federal leasing laws, and all the common car dealer leasing scams.
Part 6: Lease Dilemmas
Money saving tips, getting out of common leasing dilemmas. What to do when your current lease is due.
ALG Residual Values
Reviews of top leasing software and where to get ALG residual values. How to avoid lease payment scams.
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