How to Buy a New Car by Leasing

May 14th, 2009 admin Posted in Auto Loans | No Comments » 258 views

Nowadays with the economy being what it is, most, not all, car dealers have dropped their prices and are practically begging for your business. Right now is the best time to negotiate a lease/purchase for a new car. How does this work?

First thing you need to do is find the right car for you, and know your budget. I negotiated a lease on a Volvo S40, which came out to about 358 a month for 3 years. The MSRP was negotiated down to 22K with taxes and everything. So for three years, I’ll be paying 358 dollars, which comes out to about 12888. I put down 3000 dollars. Now, after the lease is over, the buyout lease price I got quoted is 11500. So in reality, I’m sort of getting a low finance loan through a lease. In total, I’m only paying 2388 in interest. So at the end of three years, I’ll put down 5000 dollars, and then finance the rest. At the same time, the monthly payment is lower throughout the 3 years. Comparing that using a car loan finance calculator:

To finance 22000, 3000 dollars down, at 7.43 % (would’ve been my interest rate), for 48 months, I would have to pay 458.77 a month. Yes I would have been done paying the car, but my monthly payment would’ve been higher. I would rather have lower monthly payments, and just save money during my lease term and then pay it off at the end.

Nowadays, some dealers are offering 0% APR for financing, but it’s difficult to get credit, and with the banks being what they are, you have to have flawless credit. So this way you can sort of afford to get a new car, and not have any hassles or problems of repairing it or having it break down.