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4 Leasing Tips You Didn’t Know About

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Posted on Nov 20, 2018

4 useful leasing strategies you weren’t aware of

Many drivers are aware of how car leases work, but they may not realize just how intricate they can get. If you’re strategic about how you create your lease, you could end up saving a significant amount of money over the lifetime of the contract.

Here are four leasing strategies you may not have realized existed:

Extend your lease month-to-month

Just because your lease is about to expire, doesn’t necessarily mean you’ll need to determine whether to buy the car outright or find a new one right away. Many dealerships will allow you to extend the lease month-to-month if you’re unsure about your decision.

This allows you the flexibility to do further research on vehicles on the market and gives you more time to decide whether you’d like to purchase the vehicle outright.

Sign a single-payment lease

If you have an influx of cash and prefer to lease instead of finance, you should inquire about signing a single-payment lease.

Of course, this strategy will avoid the burden of having to pay a set amount each month and, in most cases, you’ll be able to get a lower interest rate using this strategy. This strategy can be useful for young drivers who likely don’t have much of a credit history.

In an ideal world, you could trade-in your current vehicle and a little cash to pay for the single-payment lease.

Gap insurance

Gap insurance covers you for the difference between the market value of the vehicle and the amount remaining on your loan should you get into an accident. Since you generally pay less on a monthly basis in a lease, it’s a very good idea to get gap insurance, as you could otherwise end up owing thousands of dollars if your car is totaled or stolen earlier in the lease.

Unless you’ve made a significant down payment up front, getting gap insurance is a smart decision.

Make a bigger down payment

If you’ve only ever financed vehicles in the past, you may have noticed that your down payment didn’t make a huge difference on your monthly payment.

However, since you’re only paying the difference between the price of the vehicle and the value at the end of the contract in a lease, making a bigger down payment makes a lot more sense.

For example, say you’re considering buying a vehicle worth $25,000. If you make a $2,500 down payment, you’re only paying 10 percent of what you owe if you finance. However, if the residual value of the vehicle is $12,500, a down payment of $2,500 would equal 20 percent of what you owe and have a much greater effect on your monthly rate.

Trading-in your old vehicle also has a greater effect when you lease, since it’s essentially used as a down payment.

 

Open vs Closed Lease

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Posted on Nov 13, 2018

Leasing in Newmarket

What is the difference between an open vs. closed lease?

If you’re considering leasing a vehicle in the foreseeable future, it’s important to determine what type of lease is right for you. For those who aren’t aware, there are two main types of leases: open-end and closed-end.

Read below to find out a little more about each:

Open-end lease

Open-end leases allow the lessee (the one who borrows the vehicle) to guarantee a value at the end of the lease. This is called the Guaranteed Residual Value (GRV) and is outlined in the lease contract. The lessee has the option of purchasing, selling or trading-in the leased vehicle at the end of the contract for the GRV provided the car is worth at least that amount.

If the market value of the vehicle is less than the GRV at the end of the lease, the lessee is responsible for the difference, whether they plan to buyback the vehicle or return it to the lessor. For instance, if the GRV is $10,000 and the market value of the car is only $8,000 at the end of the contract, the lessee will be responsible for paying the difference of $2,000.

In return for bearing the financial risk of the lease, the lessee typically pays a less expensive rate and doesn’t have to worry about a mileage restriction.

Closed-end lease

Closed-end leases are designed to put the cost of depreciation onto the lessor, instead of the lessee. Instead of negotiating a GRV, customers have the option of either returning the car at the end of the lease (assuming it’s in good standing) or buying it back from the lessor.

However, the lessee is responsible for paying for any damages at the end of the lease that go beyond normal wear and tear. Note: normal “wear and tear” is typically more stringent with a closed-end lease compared to an open-end lease.

Most closed-end leases also have mileage restrictions between 16,000-24,000 kms per year. If you exceed this limit, you will be forced to pay a fee at the end of your lease. If you go over by a lot, you could end up paying a good chunk of change.

Open End lease vs closed end lease

 

Which lease option should you choose?

If you spend a lot of your day inside your vehicle, an open-end lease is likely the better option for you. You won’t have to worry about surpassing the mileage limit and it can be a cheaper alternative as long as the vehicle doesn’t depreciate more than the GRV.

However, the majority of consumers still prefer closed-end leases as they’d rather put the financial risk onto the lessor. As long as you take good care of the vehicle and don’t exceed the mileage limit, you won’t have to worry about paying a lump sum at the end of the lease contract.

 

Returning Your Vehicle Lease

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Posted on Nov 6, 2018

How to return your car at the end of your lease

Leases can be a smart alternative to financing, but they can also become expensive if you haven’t taken proper care of the vehicle. If you return your car in poor shape at the end of your lease, you could incur a number of charges that could ultimately lead to a hefty bill.

Here are a few things you should consider doing prior to returning your leased vehicle:

Ensure you have the appropriate tires

Make sure your vehicle is equipped with the proper tires before you have it inspected. If it’s well into the spring and you still haven’t changed your winter tires, make sure to switch them as soon as possible. Otherwise, you could end up being charged for a set of all-seasons.

If it is winter, it’s fine if you have a set of winter tires, but make sure they meet the manufacturer’s requirements ahead of time.

It should be noted that just because you have the right tires doesn’t mean you won’t get dinged. If you haven’t changed your tires since the beginning of your lease, there’s a decent chance they’ll have excess wear, meaning you will be charged for a replacement set.

Clean it

Bringing in a dirty vehicle will only start the inspection off on the wrong foot. Have the interior cleaned a couple days ahead of time to remove any garbage, dirt, and/or debris. If it looks like you take care of your car, your inspection is likely to go a lot smoother.

If you don’t want to clean it yourself, it may not be a bad idea to have it detailed instead.

Bring your maintenance records

Depending on the terms of your lease, you may be required to provide proof that you performed basic maintenance on the vehicle throughout the life of your lease. This could mean showing receipts for oil changes, filter changes, etc.

Book the inspection early

It’s a smart idea to have your inspection booked as early as the lease-return rules allow. If you wait until the last minute, you may not have enough time to correct any issues and could incur a number of charges that you could’ve otherwise fixed.

This also gives you time to get any quotes and determine whether it’s cheaper to correct the issue yourself or just pay the fee. Many drivers run into trouble when they believe the lease-return process is much quicker than it really is.

Return everything

It’s important that you return everything you received when you were given the vehicle. This means everything. A second sets of keys, the original floor mats, and a spare tire are all items that should be returned.

Negotiate

You should be aware that the inspection report you receive isn’t necessarily final. If one of the charges seems high, you’re free to negotiate a lower price.

 

Why get Pre-Approved for your Car Loan

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Posted on Aug 22, 2017

Car loan pre-approval

Unless you have the funds to pay for a vehicle with cash, you’ll need to secure financing (or a lease) whenever you purchase a new car. While this can be done after you’ve picked out a car at a dealership, there are a number of benefits to getting your loan pre-approved beforehand.

Here are a few of those benefits:

You can set a more realistic budget

Few things are more disappointing than picking out a vehicle and finding out you can’t afford it.

By getting pre-approved for a car loan, you can figure out your budget before you walk into a dealership, giving you a much better idea of how much you can spend on a new vehicle.  Not only will this make you a more educated buyer, but it will also speed up the car-buying process, as you won’t have to waste time looking for something out of your price range.

Removes stress

If your credit history isn’t the greatest, you could be facing the prospect of being rejected for a loan. This can be a very uncomfortable feeling for some people and can create a large amount of stress and worry throughout the car-buying process.

Getting pre-approved can help to reduce any stress considerably – as you’ll know up front what you qualify for – making your experience much more positive.

Saves time

While it depends on the person, some car buyers actually spend more time in the finance office than they do picking out a vehicle.

If you’re someone who doesn’t have the time to spend a half or even full day at the dealership, getting your loan pre-approved can speed things up considerably.  It could also allow you to spend the proper amount of time inspecting your vehicle before driving it off the lot.

Either way, the car-buying process can be much quicker if you get your loan secured ahead of time.

You don’t have to wait for approval

While most financial institutions have sped up their processes in recent years, you typically still need to wait a day or two to get your loan approved. However, this is assuming that you’ve provided the correct information. If not, the approval process can be much longer and can add to the stress and uncertainty.

If you do it all ahead of time, you won’t have to worry about any of this.

Simplifies the car-buying process

If you’re someone who tends to get overwhelmed with numbers and paperwork, you could be doing yourself a big favour by getting pre-approved for a loan. By getting the hard stuff out of the way ahead of time, all you’ll need to worry about is the car itself when you walk into the dealership.

Happy shopping!

 

Everything You Need to Know About Leasing

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Posted on Dec 29, 2015

Everything You Need to Know About Leasing

One of the biggest decisions you’ll need to make during the car buying process is deciding how to actually pay for your desired vehicle. For most consumers, that means choosing between leasing and financing. Leasing can be the better option, but it really depends on the person. Read ahead to help get yourself better acquainted with car leasing.

It Can Be Cheaper Than Buying

Leasing isn’t for everyone, but there are certain factors that make it a more attractive option than financing.
Since payments are based on the difference in the car’s value between the beginning and the end of the lease, monthly fees are cheaper than financing since you’re not paying for the entire vehicle.

You Can Drive Your Dream Car

Since leasing is cheaper, you can drive a vehicle that you may not normally be able to afford otherwise. You also have the option of getting a new luxury car quite often, since most leases don’t last longer than a few years.

You likely won’t have to spend much on maintenance fees, since newer vehicles generally don’t break down as often.

Finally, you can drive more comfortably, as you will have the privilege of using the latest safety technology with your new car.

Leasing is a Binding Contract

If you are unsure about your financial future, don’t sign up for a lease if you realistically won’t be able to afford it. Make sure to budget beforehand and ensure you’ll be able to pay for the monthly payments throughout the lifetime of the lease.

Walkaway Protection –  Some dealerships such as NewRoads and NewRoads National Leasing offer Walkaway protection for the consumer covering you up to $7,500 in situations related to job loss etc. Read more about Walkaway here.

Limited KMS

When you sign your lease, there will be an agreement in place stating the number of kilometres that you’re allowed to drive per year. Dealerships will do this since they still want the car to be in fair condition when your lease eventually ends.
If you are someone who commutes long-distance, leasing is likely a less attractive option for you than a person who drives more sporadically.
There will be a penalty if you go over the specified limit and it can end up being quite expensive depending how much you override. Before you agree to anything, make sure to calculate the amount of kilometres you typically drive in a year to see if the deal makes financial sense. The bright side?  You’re actually able to purchase additional kms up front if you feel you’ll need them.

Returned in Good Condition

If you are a responsible and careful driver, you shouldn’t have any problem with this one. Normal wear and tear is expected when you return the vehicle, but the dealership will have an issue if the car needs serious repairs.

If you tend to drive somewhat aggressively and find yourself at the mechanic often, you will have to eventually pay for the damage when your lease is up.

You Can Still Purchase the Vehicle After
If you really loved your vehicle, you still have the option of buying it at the end of the lease. While this is not the most cost effective way of owning a car, you can take comfort in the fact that the vehicle can still be yours if you truly enjoy it. ​

 

Everything You Need to Know Before Leasing a Vehicle

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Posted on Jul 28, 2015

Everything You Need to Know Before Leasing a Vehicle

 

Deciding whether to purchase or lease your vehicle can end up being one of the most important aspects of the car buying process. It’s important to know what you’re getting into when leasing a vehicle, and realize the benefits and weaknesses of doing so. Read ahead for a better understanding on how leases work, so you can make a more informed decision when buying your new vehicle.

 

Determining Your Monthly Budget

Since you’re only paying for the depreciation of the vehicle in a lease, you’ll ultimately have lower monthly payments than if you choose to finance. However, if you’re someone who prefers to change up what they drive every 3 to 4 years, then it really shouldn’t matter.

 

Getting Out Early

While it’s possible to get out of a lease early, you’ll likely end up facing an early termination fee. This may offset the financial advantages you gained when leasing a vehicle in the first place.

 

Your Driving Habits

Since the dealership will ultimately try and sell your vehicle after your lease is up, they’ll want it to be in good shape. As a result, there’s normally a mileage allowance in the lease. If you exceed this amount, you’ll have to pay extra when you return the vehicle.  If you have a long commute to and from work, chances are you’ll end up pushing the limits of this allowance. In this case, it may make more sense for you to finance the vehicle as opposed to leasing it.

In addition for overage fees, you can also be charged if there is excessive wear and tear to the car. Therefore, it’s still important to properly maintain the vehicle over the lifetime of the lease. Fortunately, you may be able to get some of your repairs covered, since your car will most likely be under warranty with the lease.

 

What to Do When Your Lease is Up

Once you have returned your vehicle in good shape, there are a couple things you can do moving forward. Either you can start a lease with a new car or you can buy the vehicle you were leasing outright if you were satisfied with it.

 

Driving the Car of Your Dreams

While there’s no need to go overboard when leasing a vehicle, it does give you the ability to drive something a little more luxurious. If you’re someone who likes to hop on the newest trends, or just want to take advantage of some of the new safety and other features available on the market, leasing would appear to be the superior option for you.

 

When You Should Lease                            

If you don’t have a lot of money up front, but still have a constant flow of cash, then leasing may be the right option for you. It will cost you less than financing it, and can also allow you to drive something a little more expensive. Not being able to own the car can be troubling for some, but it really shouldn’t make a huge difference if you weren’t planning on keeping it for a long time anyway.

 

 

Top Reasons Why You Should Lease Your Vehicle

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Posted on Mar 3, 2015

Top Reasons Why You Should Lease Your Vehicle

 

When it comes to car buying, a big decision is how you should pay for it. One option that has become increasingly popular over the years is leasing your vehicle.

 

One of the biggest reasons individuals choose to lease their vehicle is that there is little to no down payment required. This is great for drivers who hold a steady income but don’t have a lot of money up front.

 

Another benefit of leasing your car is being able to drive something that you might normally not be able to drive. Purchasing a new vehicle can be very expensive, so it’s nice for drivers to have the option of renting it for a set period through a lease.

 

In addition, you have the option of driving a brand new vehicle every few years. Unless you make a hefty income, you wouldn’t be able to do this if you chose to finance your vehicle when you purchased new.

 

Finally, you still have the option of purchasing the vehicle at the end of the less if you really like the car. You will be able to purchase it at a reduced rate and continue to drive the vehicle you love.

 

Terminating a Car Lease Early

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Posted on Nov 11, 2014

Terminating a Car Lease Early

 

Many people are under the impression that once you’re in a car lease, you are stuck in it until the expiry date. However, there are many ways to get out of or alter your lease to fit your needs and preferences. Read ahead to learn how you adjust your lease and the different options that you have available to you.

 

If you know someone else who is interested in taking over your lease, you can transfer it over to another party. This method is cheap as it will only cost you in administrative fees and can help prevent you from paying a lease that you are not interested in.

 

If you’re still interested in leasing a different vehicle, you have the option of trading leases. If the car is worth less than the lease payments, you will have to pay the difference on top of whatever your new lease is.

 

Finally, if you acquire a sudden influx of cash, you also have the option of paying the remainder of your lease off. If the vehicle is worth more than the buyout, you will have the possibility of making money on the car.

3 Things You Didn’t Know About Leasing

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Posted on Jul 25, 2014

3 Things You Didn’t Know About Leasing

 

There are many misconceptions when it comes to leasing, which is why many people stray from doing it. However, leasing a car can be the superior option to buying depending on the person. Read ahead to learn more on leasing and see if it is right for you.

 

Many people think that once they sign a lease, they are stuck with it until the end of the lease. Not only is this completely false, but many leases actually do end early. Although a buyout is required, you are still not stuck with your vehicle until the end if you don’t want to.

 

Another common misconception about leasing is that it is not a good deal. While leasing can be a worse deal than financing a vehicle, this is only true if you own the vehicle well past when the loan has been paid off. Unless you keep your vehicle for a long time, the person who leases generally has the better deal than the person who finances.

 

Finally, many people think you’ll have to pay massive fees when you eventually turn in the vehicle. It is true that you get charged for every kilometre that you go over, but you can just purchase the car outright it that’s a big issue. Also, by picking a lease option that allows for a larger kilometre limit you won’t have to worry about running into this problem.

 

Patrick Britton

 

Should I lease or Finance my Car?

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Posted on Dec 27, 2013


Yes, that is the question we encounter often here at NewRoads Chevrolet Cadillac Buick GMC. Unfortunately it would be impossible for us to give you the right answer as the answer depends on your needs and wants, but we can certainly try to make your decision simpler. First make sure you understand the difference between the two:

 

Financing: You will pay the full price of the car in monthly installments over a fixed term, and when the payments stop you will still own the car.

 

Leasing: Like financing you will have monthly payments over a fixed term. But instead of paying the full price of the car, you will only pay the difference between the original sales price and the residual value (what the car is estimated to be worth after the term is up). When the payments stop you have options, you can give the car back and get a new car, or pay the residual value to own it.

 

The next thing to do is ask yourself a few questions:

How long do I want to keep this car? If you’re the type of person to drive a car for 2 or 4 years, then trade it in for a new one, leasing could be the better option. If you like to pick a car and keep it for a long period of time, financing could be the way to go.

 

How far do I drive annually? In the lease agreement there will be a mileage limit. If you won’t surpass that, leasing is still a great option. If you will, be aware that it can significantly increase what you owe at the end of the lease. Really you are only paying for “how much” of the vehicle you use.

 

Let’s look at a simple list of pros and cons:

Leasing

Financing

PRO: Monthly payments mean you do not have to lay down the full cost of the vehicle at once. PRO: Monthly payments mean you do not have to lay down the full cost of the vehicle at once.
CON: There is a limit on your annual mileage PRO: No limit on annual mileage
PRO: Lower monthly payments as you are only paying the difference between the starting cost and the residual CON: Higher monthly payment as you are paying for the full cost of the vehicle
PRO: For all or most of the term, maintenance will be covered under warranty CON: After the warranty ends you will be paying for all repairs, labour and parts
PRO: Only pay tax on the payment CON: Pay tax on entire price of vehicle

 

In the end it is impossible to tell you the best choice without knowing what you want and what is important to you. If you are still unsure, contact our finance and lease professionals about your different options and they can help you decide which will suit you best.

 

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