Honda Car Forum

Besides the obvious mileage restrictions and ambiguous 'wear and tear.'
Is there a balloon payment at the end? Etc...?

"Kyle" <kgavin@speakeasy.org> wrote in message
news:ZuGdndRlINZIzRCiRVn-vw@speakeasy.net...
> Besides the obvious mileage restrictions and ambiguous 'wear and tear.'
> Is there a balloon payment at the end? Etc...?

The payment due at the end of a lease is called the residual. This is only
due if you wish to keep the car.

The downsides of leasing -

1) Remember that you are only "renting" the car. Any permanent changes you
make (Installing a stereo system, modifying the engine, etc.) can be used
against you when you turn the car in, as they will estimate the value of the
vehicle at time of turn in. If the value of the vehicle is too low, you owe
them the difference between that value and the residual.

2) In some lease contracts, a much higher insurance minimum must be
maintained on the vehicle (by contract). Requiring 150/300 (PL/PD) is not
abnormal. You should read the lease and check with your insurance agent
before you lease to avoid a nasty "surprise".

3) Many leases will not allow you to leave the state (that the lease was
executed in) without prior approval.

4) Lease payments can change over the life of the contract, due to the fact
that you are making a rental payment PLUS tax. If the tax rate changes,
your payments go up.

Try here for other information:

http://autos.msn.com/leasing/default.aspx

Don

Don in Phoenix, AZ wrote:
> "Kyle" <kgavin@speakeasy.org> wrote in message
> news:ZuGdndRlINZIzRCiRVn-vw@speakeasy.net...
>
>>Besides the obvious mileage restrictions and ambiguous 'wear and tear.'
>> Is there a balloon payment at the end? Etc...?
>
>
> The payment due at the end of a lease is called the residual. This is only
> due if you wish to keep the car.
>
> The downsides of leasing -
>
> 1) Remember that you are only "renting" the car. Any permanent changes you
> make (Installing a stereo system, modifying the engine, etc.) can be used
> against you when you turn the car in, as they will estimate the value of the
> vehicle at time of turn in. If the value of the vehicle is too low, you owe
> them the difference between that value and the residual.
>
> 2) In some lease contracts, a much higher insurance minimum must be
> maintained on the vehicle (by contract). Requiring 150/300 (PL/PD) is not
> abnormal. You should read the lease and check with your insurance agent
> before you lease to avoid a nasty "surprise".
>
> 3) Many leases will not allow you to leave the state (that the lease was
> executed in) without prior approval.
>
> 4) Lease payments can change over the life of the contract, due to the fact
> that you are making a rental payment PLUS tax. If the tax rate changes,
> your payments go up.
>
> Try here for other information:
>
> http://autos.msn.com/leasing/default.aspx
>
> Don
>
>

Thanks

I'll tell you what the problem is. I leased a TL-S two years ago. Since then
I've had my headlights stolen twice - the first caused about $5000 of damage.
I do NOT want this car anymore. But guess what? I'm stuck with it, unless I
sell the car at a HUGE loss - because I'd have to keep making the lease
payments AND pay off the balloon payment at the end.

I'm DONE with leasing.

See below...

Don in Phoenix, AZ wrote:
> "Kyle" <kgavin@speakeasy.org> wrote in message
> news:ZuGdndRlINZIzRCiRVn-vw@speakeasy.net...
>
>>Besides the obvious mileage restrictions and ambiguous 'wear and tear.'
>> Is there a balloon payment at the end? Etc...?
>
>
> The payment due at the end of a lease is called the residual. This is only
> due if you wish to keep the car.
>
> The downsides of leasing -
>
> 1) Remember that you are only "renting" the car. Any permanent changes you
> make (Installing a stereo system, modifying the engine, etc.) can be used
> against you when you turn the car in, as they will estimate the value of the
> vehicle at time of turn in. If the value of the vehicle is too low, you owe
> them the difference between that value and the residual.
>
I've never heard of that. I guess if you add some odd accessories they may
penalize you. If you upgrade your exhaust, for example, you shouldn't have a
problem.

> 2) In some lease contracts, a much higher insurance minimum must be
> maintained on the vehicle (by contract). Requiring 150/300 (PL/PD) is not
> abnormal. You should read the lease and check with your insurance agent
> before you lease to avoid a nasty "surprise".
>
These limits are not high by today's standards. They protect you more than the
bank. I carry higher limits than that because it's inexpensive and if something
should happen I don't lose my house. There are too may high dollar lawsuits
these days to get cheap on liability coverage. My only complaint with leases is
that they often require very low deductibles. I prefer $1000 since it makes
sense financially to pay for anything less out of pocket. This might be negotiable.

> 3) Many leases will not allow you to leave the state (that the lease was
> executed in) without prior approval.
>
I've never heard of that either with six leases from three "banks". Seems too
restrictive to me. I can take my car to Canada if I wanted to drive 1500 miles...

> 4) Lease payments can change over the life of the contract, due to the fact
> that you are making a rental payment PLUS tax. If the tax rate changes,
> your payments go up.
>
This varies by state. Some charge tax on the full price of the car up front.
Others charge only on the payments. If your car is stolen, you are better off
with the latter arrangement. Also - some states cap sales tax on cars so an
increase may not affect you. Either way, if you buy the car for the residual
value you will pay the tax for that transaction since you are the new owner.

> Try here for other information:
>
> http://autos.msn.com/leasing/default.aspx
>
> Don
>
>

Just to make some points that address items in your post:

Lease-end residuals can be negotiated with some, but not all, lease
companies. If the lease-end value is considerably higher than the
vehicle's market value, then it's time to negotiate. On the other
hand, it's possible that the residual may be lower than market value
and you can purchase/resell to make a profit. This is not common, but
it happens.

1) Your description is for an open-end lease, which is not used for
consumer leases in the U.S. anymore (some use still in Canada).
Closed-end leases are the usual. These are often called "walk-away"
leases since you can return the car at lease-end with no further
obligation (assuming no mileage fees or wear fees), even if the car
has greatly depreciated in value.

2) It's true that leases require higher than minimum insurance
coverage but, in these days of sue-happy accident victims, it's good
to have as much insurance as you can afford - lease or purchase.

3) Only local lease companies prohibit you from leaving the state --
and local leasing companies are rare these days. National banks,
financial companies, and car manufacturer's financial arms (e.g. GMAC
and Ford Credit) do not have these restrictions -- although they do
prohibit taking the vehicle out of country (Canada is sometimes OK).

4)It's true that your lease payment can change due to sales tax rate
changes, but this is a minor part of your overall payment. What is
more common is if you move to another state that has a different rate.
Your payment can go up or down slightly as a result. But paying sales
tax only on monthly payments (in most states) is better than paying
sales tax on the entire car, in one lump sum.

Try here for more information: www.LeaseGuide.com/index2.htm

-----------------------------------

"Don in Phoenix, AZ" <DJDixon1@cox.net> wrote in message news:<iqfjb.1949$B_2.1394@okepread02>...
> "Kyle" <kgavin@speakeasy.org> wrote in message
> news:ZuGdndRlINZIzRCiRVn-vw@speakeasy.net...
> > Besides the obvious mileage restrictions and ambiguous 'wear and tear.'
> > Is there a balloon payment at the end? Etc...?
>
> The payment due at the end of a lease is called the residual. This is only
> due if you wish to keep the car.
>
> The downsides of leasing -
>
> 1) Remember that you are only "renting" the car. Any permanent changes you
> make (Installing a stereo system, modifying the engine, etc.) can be used
> against you when you turn the car in, as they will estimate the value of the
> vehicle at time of turn in. If the value of the vehicle is too low, you owe
> them the difference between that value and the residual.
>
> 2) In some lease contracts, a much higher insurance minimum must be
> maintained on the vehicle (by contract). Requiring 150/300 (PL/PD) is not
> abnormal. You should read the lease and check with your insurance agent
> before you lease to avoid a nasty "surprise".
>
> 3) Many leases will not allow you to leave the state (that the lease was
> executed in) without prior approval.
>
> 4) Lease payments can change over the life of the contract, due to the fact
> that you are making a rental payment PLUS tax. If the tax rate changes,
> your payments go up.
>
> Try here for other information:
>
> http://autos.msn.com/leasing/default.aspx
>
> Don