If you are looking to return, replace, or buyout your current NMAC ( Nissan Motor Acceptance Corporation ) lease vehicle in the Dallas-Fort Worth area, please give me a call ( 817-588-5571 ), or launch an email to me ( jwhitehouse@ddag.com ). We can advise all your NMAC lease administration needs quickly and professionally. If Nissan End-of-Lease Options are your aim, contact me now...If you are interested in how leasing works, read on.
The concept of automobile leasing is fairly simple, you pay for the portion of a vehicle that you actually use. Leasing is a well-respected concept that has long been used in the business world as a method of financing buildings, equipment, and vehicles. Leasing done correctly will save you money and allow you to use the money you have more effectively.
As with any business transaction, the key to successful and intelligent automobile leasing is understanding how the process works, taking the time to properly prepare yourself, and using it to your benefit.
Leasing offers people a way to drive the vehicles they want for less money and less hassle. Low monthly payments are the big attraction, although we'll soon find out why it's important to look at other factors before deciding to lease.
Leasing may not fit everybody's needs and lifestyle. Leases can be somewhat more complicated than new-car purchase loans and require greater care and preparation in order to get a good, fair deal. Some people will discover that leasing offers them no benefits. Others will realize that leasing is right for them and that they can benefit greatly.
Leasing is nothing more than a method of paying for the use (depreciating value) of a car, or truck, over a specified period of time. Sounds like renting, but don't get the two confused because they are very different. While you can rent a car for as little as a day, or even a few hours, leasing typically starts at 24 months and doesn't provide for easy termination or vehicle swapping.
Signing a lease contract means that you agree to make regular monthly payments, keep appropriate insurance, pay any vehicle taxes and licensing fees, and take good care of the vehicle. Further, you agree that you'll keep the car for a specified number of months — typically between 24 and 48. .
At the end of the lease you're expected to return your vehicle to the lessor with no more than normal wear and tear. You'll have to pay for any damage or extra mileage over and above your contract-specified limits.
You usually have an option to purchase your vehicle at lease-end for a specified price, if you choose. Or you may be able to use the car as a trade-in on a new car (very advantageous if you have positive equity value in the vehicle). Otherwise, you can simply return the vehicle and walk away.
Automobile leasing is based entirely on the concept that you pay for the amount by which a vehicle's value depreciates during the time you're driving it. Depreciation is the difference between a vehicle's original value and its value at lease-end (residual value).
If you consider two different cars, both costing $20,000 when new, where one is worth $15,000 after two years and the other worth only $12,000, the first car will cost less to lease because of its smaller depreciation.
Different models of vehicles can have very different depreciation rates. Those vehicles having the lowest depreciation usually make the best lease deals.
Let's take a look at MSRP (manufacturers suggested retail price) and residual value, as well as the other components of leasing — capitalized cost reduction, money factor, and lease term — to understand how leasing works.
MSRP is the full price for a vehicle as displayed on its window sticker, including optional packages and destination charges. Dealer fees, and added equipment are not considered part of MSRP, although these charges are part of the overall cost of the vehicle.
When you and your dealer sit down and agree on a price for a leased car, this becomes the basis of capitalized cost, or "cap cost”. Capitalized cost may also include certain fees, such as an acquisition fee (acquisition fees are typically charged by a lessor to set-up, or acquire, your contract from a dealer). If you haven't fully paid off the vehicle you're trading, cap cost would also include any remaining loan balance after trade-in credit is applied.
Customer lease cash, factory-to-dealer incentives, trade-in credit, or cash down payment can reduce capitalized cost. These are known as cap cost reductions. Even modest cap cost reductions, such as a down payment, can create significantly smaller monthly lease payments, especially in shorter leases. When you subtract cap cost reductions from cap cost, you get the adjusted cap cost. This is the figure you'll use in the lease payment formula later.
The wholesale worth of a car at the end of its lease term, after it has depreciated, is called its residual value. The higher the residual value, the more the car is worth at lease-end — and the lower your lease payments. Since nobody can truly predict the future, residuals are only educated guesses based on historical resale-value data for specific automobile makes and models. Car manufacturers' leasing companies often temporarily boost residuals on selected vehicles so that they can offer better lease deals. These are called sub vented deals. Residuals are usually stated as a percentage of MSRP. A 36-month, 50% residual on a new $20,000 car means that its estimated depreciated value at the end of a 3-year lease will be $10,000. The actual value at the end of 36 months might be higher or lower. Residual percentages decrease as the length of a lease, called the lease term, increases. This is because the older a vehicle gets, the less it's worth.
Residuals fall rapidly in the first 24 months, then more slowly in later months. This is why shorter-term leases are more expensive than longer leases. A rule-of-thumb: The best cars to lease are those whose 24-month residuals are at least 50% of their original MSRP value. This is not to say that cars with lower residuals cannot be good lease deals, it's just that you get more car for your dollar with the high-residual models.
When you lease, you're tying up the leasing company's money while you're driving their car. Remember, they spent their money to buy your car from the dealer so that they could lease it to you. They rightfully expect you to pay interest on that money, the same as with a loan. This interest is expressed as a money factor, and is specified as a small decimal number such as .00297. Money factors can be converted to annual interest rate (APR) by multiplying by 2400, for example, a money factor of .00297 multiplied by 2400 = 7.13%.
Lease term is the length of time a car is leased, usually expressed in number of months. Typical leases are 24, 36, or 48 months, although terms such as 30, 39, and 42 months are frequently seen in lease promotional ads. Although longer leases produce somewhat lower monthly payments it may be smarter to choose a shorter lease term.
By choosing a lease term that's no longer than the general coverage warranty that comes with your vehicle, you're covered for the entire duration of the lease if something breaks. Many major vehicle problems start in the fourth or fifth year, and you’re responsible for maintenance and mechanical breakdown expense. For this reason, 60-month leases, which are declining in popularity, are not recommended. You will also generally see better residual values with shorter terms, often translating to lower payments. Shorter term leases also fit in better with a rapidly changing life, and most of us are increasingly unsure what we’ll be doing in the next five years
Nissan often offers special incentivized leasing programs on different models . Special lease programs can be seen on Nissans website. These programs are available month-to-month, just like financing specials or rebates. Call me to find out details on any programs that Nissan is currently offering, or to ask any questions you might have, or to set an appointment to get your next new Nissan!.
James Whitehouse 817-588-5571
Don Davis Nissan
