While it is true one pays the interest on the purchase price of
the lease vehicle, one does NOT pay the full amount of interest
on the purchase price. The interest due on a lease is no
different than on a finance contract, in respect to the total
interest paid. If one had a two year finance contract and pay
the contract off in one year rather than two, the last years
interest is not payable. The same applied to a lease. In other
words it IS true you pay only the depreciated value of the lease,
plus the interest on that amount, but calculate on the full
amount paid by the leasor to acquire the vehicle. I.E. On a two
year lease if the capitol cost of the lease is 20K the LEV is
13k. You pay 7k plus the interest calculate on 20K for two
years, not on 7k plus the interest calculate on 7K for two
years. Consumer loan laws would not apply, any more than they
would to the rent of an apartment. One should never buy a leased
vehicle at the end of a lease, period!!! If you do you negate
ALL of the advantages of leasing and pay more for the privilege.



mike hunt



"Elm P. Shag nasty" wrote:
>
> In article <9e0485ae.0309021905.4c2718e5@posting.google.com >,
> roadieroger@earthlink.net (Roadie Roger) wrote:
>
> > You are paying Interest on the full financed value of the car for the
> > time you lease it. The statement that "you only pay for the part of
> > the car you use" has to be taken with a grain of salt.
>
> Hear hear!
>
> A lease, from a technical standpoint, is really nothing but a loan with
> a balloon payment and a contract with the lessor that he'll take the car
> back to fulfill the balloon payment.
>
> Of course, the lessor will demand the car back in perfect condition and
> within the allowed mileage. That's the term of the contract. If it's
> not in perfect condition or within the allowed mileage (see your
> contract; a lease is a CONTRACT, and all terms are spelled out
> completely), you'll pay for the damages or miles that are above and
> beyond what the contract allows for.
>
> A lease is really very simple. However, one point that no one
> understands: from a LEGAL standpoint, a lease is COMPLETELY DIFFERENT
> than a loan contract. Consumer lending is a very mature arena, and is
> covered by many, many laws that restrict the lenders from pulling funny
> stuff. These laws have come about over the last 50 or so years of
> people buying cars and homes.
>
> But leasing is LEGALLY a different ball game, and the protections
> afforded a consumer under the lending laws don't apply. Therefore, the
> lessor can pull all sorts of fast ones on the lessee, and unless the
> lessee reads the contract, the lessor will win every time. And it'll
> all be legal.
>
> Most people don't bother to read their contracts, so they get screwed.
> Then they come to the newsgroups and start asking questions, as if we
> have copies of their contract in hand or something and can talk about
> their situations.