Consumer Reports Lease Vs Buy

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consumer reports lease vs buy

Another key finding: Nearly half of Americans (46%) are unaware of the incentives available to purchase an EV. 53% say tax rebates or discounts at the time of purchase would encourage them to do so. Many consumers can save thousands of dollars on the price of an electric vehicle with existing federal, state, and local incentives, such as power utility incentives.

CR will share the survey findings with automakers, federal and state officials, and other stakeholders as it advocates for solutions to help consumers save money on transportation, reduce emissions, and improve public health.

Founded in 1936, Consumer Reports has a mission to create a fair and just marketplace for all. Widely known for our rigorous research and testing of products and services, we also survey millions of consumers each year, report extensively on marketplace issues, and advocate for safety, digital rights, financial fairness, and sustainability. For more information, visit consumerreports.org.

Consumer Reports fielded a nationally representative survey gauging consumer attitudes and awareness of electric-only vehicles and low carbon fuels. The survey of 8,027 American consumers is the largest survey sample in the history of CR, the nonprofit consumer research, testing, and advocacy organization.

But the hassle-free image of leasing that auto manufacturers and dealers are eager to project can be a mirage. We evaluated scores of lease ads appearing in ten metropolitan newspapers across the U.S. and turned up dozens of offers that could mislead or even deceive an inattentive shopper.

And a special survey we commissioned of a nationally representative sample of 305 recent lease customers showed that a majority had done a poor job of shopping for the vehicle, negotiating the most favorable terms, or steering clear of costly end-of-lease charges

ACVL Comment:Lease customers have consistently been found by independent surveys to be more satisfied with their vehicles and their financing choice than cash customers or loan/credit customers. Shopping for a lease is no different than shopping for any other consumer purchase. A consumer shops for the best product value and comparison shops retailers offering the same product. The consumer should: investigate the transaction cost; compare payments, vehicles, mileage requirements, and end-of-lease options; ask questions and become comfortable with a transaction before signing a contract obligating themselves to a lease or purchase.

ACVL Comment:Not really. Leasing has standards of maintenance, mileage and insurance. Failure to stay within the agreed upon standards may subject the lessee to additional charges. If a lessee agrees to average no more than 15,000 miles per year, the lease payment is determined based on the projected value of a vehicle with that mileage at lease end. There is no restriction on the number of miles that a lessee can drive. However, the end value of a vehicle will decline if the mileage is more than agreed upon. The leasing company must then be compensated for the reduced value of the vehicle. The only other typical lease restrictions are for avoiding commercial use or use in commission of crimes.

ACVL Comment:There is no mystery here, the value of a vehicle declines with damage and wear. The end value of a vehicle is established based on the lessee returning a well-maintained vehicle with no more than the agreed-upon mileage. If the lessee knows that he will drive more miles than outlined in the lease or generally abuses the vehicle, the lessee must be prepared to compensate the lessor for the decline in value based on excess miles and damage. Excess wear and tear standards are fully defined and disclosed in lease agreements. They are usually well within the boundaries of reasonableness.

ACVL Comment:Lessees select their annual mileage at lease inception. The guaranteed end value (residual value) is based on this mileage. Consumers are advised to select a mileage level that corresponds to their true expected mileage. Some consumers declare lower mileage usage than they really expect to have, in order to obtain a lower payment. It is the old adage, pay now (i.e., as you go) or pay later. If the mileage is set accurately by the lessee, the monthly payment will increase but mileage charges will not be charged at lease end. Lessees should remember that the purchase of mileage over the term is generally less than the cost of excess mileage at the end.

To determine whether the leasing lifestyle is for you, look ahead to the full term of your lease. How likely are you to change jobs or move to a new home that requires you to rely on your leased vehicle for a long daily commute?

ACVL Comment:Many lessors allow you to change your mileage allowance during the lease if you find that you are driving more than you expected. You can then avoid a large bill for excess mileage charges at lease end

ACVL Comment:Consumers should choose low-mileage leases if they drive less than the standard 15,000 miles per year. As pointed out by Consumer Reports, 12,000 mile per year leases are readily available and 10,000 mile per year leases are also available in most areas. However, if the vehicle is worth more than its trade-in value, almost all leases give you the right to trade it or buy it and recoup the equity.

But our survey findings suggest that substantial numbers of consumers fail to focus on the economics of their lease deal. In fact, more than one-quarter of our survey respondents never considered any alternative to leasing.

ACVL Comment:Such subsidized leases can be highly attractive to consumers. Also, manufacturer cash rebates can usually be applied universally to any leasing source, as well as any financing source.

ACVL Comment:Knowing the MSRP and the invoice cost is useful for any consumer doing comparative shopping. Depending on supply and demand conditions, discounts on vehicle pricing and leases may be possible.

Most auto dealerships work with at least four leasing companies, and terms can vary significantly among them. The savings from choosing the right leasing company can be big. On a 36-month lease for a 2001 Chevrolet Blazer, for example, GMAC sets the residual value at $14,219, or nearly $1,300 more than an equivalent lease offered by Wells Fargo Bank. At the same time, the effective annual percentage interest rate a top-tier credit customer would pay under a GMAC lease based on MSRP is just 5.06 percent.

Choose the right mileage allowance. If you exceed the mileage limitation stipulated in the lease, you could end up paying as much as 20 cents for each additional mile you drive. You may be better off purchasing additional miles at a discount before you take possession of the vehicle, as 32 percent of our survey respondents chose to do when they leased. The saving can be significant, since most lease-financing companies will let you boost your mileage limits at the lease inception for anywhere from 8 to 16 cents a mile.

But remember, the more miles you buy and use, the more likely you are to incur charges for excessive wear and tear. So make sure you understand what the dealer deems excessive before you sign the lease.

But if, on the other hand, you drove many fewer miles than your lease allowed, you may want to investigate whether it makes sense to buy the vehicle at the purchase-option price the lease stipulates and then resell it on your own if its market value is higher.

ACVL Comment:Clearly, consumers know far in advance when their lease will terminate. Shopping early for a new replacement vehicle is a sound idea if you do not wish to purchase your leased vehicle. Most lessors provide a pre-return inspection, typically 30 days prior to lease end. This will give you a good idea of what excess wear and tear you have and give you the time to correct it before you relinquish the vehicle at lease end. Avoiding excess mileage by selecting annual mileage requirements that conform to your driving needs is most desirable.

When it comes to the process of buying or leasing a new car, Consumer Reports has some helpful tips to get you through the process. The decision to purchase or lease a vehicle is a big decision, but one option might make more sense than the other, depending on your financial situation. Check out the list of pros and cons below. \n\n\n\nThe pros of leasing a new car, according to Consumer Reports\n\n\n\nSigns offering lease deals on new cars David Cooper\/Toronto Star via Getty Images\n\n\n\nThere are many good reasons for people to lease a car, Consumer Reports says. The monthly payments tend to be lower since you won\u2019t be paying principal. Instead, you are just borrowing and repaying the difference between the vehicle\u2019s value when new and the expected value when the lease ends. Plus, paying finance charges. \n\n\n\nYou get to drive the new car during the best and most trouble-free years.The car has all of the newest technology, keeping you safe in an accident.The new car is covered by a warranty should anything go wrong.The lease might cover some maintence like oil changes and tire rotations.Leasing a new car allows you to be in a safer and newer car than you might be able to afford otherwise.There is no worry about the vehicle\u2019s value fluctation or trying to sell it once the time comes.Some buisness owners might see signifigant tax advantages. When the lease is over, you simply drop the car off and move on.\n\n\n\nConsumer Reports weighs the cons to leasing a new car\n\n\n\n\n\n\n\n\n\n\n\nWhile there are a lot of benefits to leasing a new car, there are also some disadvantages that should be made aware of. Consumer Reports has a few negatives that come with a lease on a new car. \n\n\n\nAt end of the lease period, you usually end up paying more for the vehicle than you would with a loan. This is because the first few years of the life of the car are also the years where it depreciates the most.If you jump from one lease to another, the montly payments never end. In comparison, keeping the vehicle after the loan is paid off will give you more value overall. The best option is to buy the vehicle and keep it until it isn\u2019t economical to keep it any longer.Leasing a car comes with some stipulations, like miles. If you go over these specified miles, there is a penalty. That usually means paying for every additional mile. You don\u2019t get a refund for unused miles.You have to keep the vehicle in good condition and follow through with maintence. If you don\u2019t, there will likely be fees to cover the damage or whatever else might have happened. Especially if there is a lot of damage. If you decide not to continue with the lease for one reason or another, there will likely be a lot of fees associated with that decision. These are called early termination fees and will be due when you end the lease. These fees can amount to the cost of the full lease.You still have to pay for items like tires, which are an added cost depending on the type of vehicle. If you get a more expensive or larger vehicle, the price of tires can be a lot. \n\n\n\nThe decision to lease a new car comes down to personal finances\n\n\n\n\nSave money on your new car lease with these tips. https:\/\/t.co\/nwXbyaOaYe\u2014 U.S. News Cars (@USNewsCars) February 15, 2022\n\n\n\n\n\n\n\tRelated\n\t\n\t\t\n\t\t\tAsk Edmunds: Should I Fix My Old Car or Buy a New Car?\t\t\n\t\n\nConsumer Reports says leasing makes more sense for some people at the end of the day. It can get you into a nice, new, safe car that you might not be able to afford otherwise. It can also offer lower payments in some situations than buying the vehicle outright. Leasing a vehicle can also help you build credit if you make payments on time. It is pretty simple, and while you have to take the car in for maintenance, you don\u2019t have to pay for it. \n\n\n\nHowever, leasing doesn\u2019t always make sense for people. If you have saved up and have found an affordable vehicle, leasing might not be the most budget-conscious choice. These days, buying a new car outright is more expensive than ever, though. \n\n\n\nIf you are in this position, try making your pros and cons list like the one Consumer Reports made. Weigh out the pros and cons of your situation and financial situation to see which option makes more sense. Either way, hopefully, you get into a safe new car that you can afford. Be sure to maintain your vehicle if you lease or own it to stay on top of things. \n\n\n","ptime":"2022-02-17T12:00:00","custom_date":"","custom_datedesc":"","author":"name":"Amanda Cline","slug":"amanda-cline","url":"https:\/\/www.motorbiscuit.com\/author\/amanda-cline\/","twitter_link":null,"facebook_link":null,"linkedin_link":null,"instagram_link":null,"comment_count":0,"review_schema":" David Cooper\\\/Toronto Star via Getty Images There are many good reasons for people to lease a car, Consumer Reports says. The monthly payments tend to be lower since you won\\u2019t be paying principal. Instead, you are just borrowing and repaying the difference between the vehicle\\u2019s value when new and the expected value when the lease ends. Plus, paying finance charges. You get to drive the new car during the best and most trouble-free years.The car has all of the newest technology, keeping you safe in an accident.The new car is covered by a warranty should anything go wrong.The lease might cover some maintence like oil changes and tire rotations.Leasing a new car allows you to be in a safer and newer car than you might be able to afford otherwise.There is no worry about the vehicle\\u2019s value fluctation or trying to sell it once the time comes.Some buisness owners might see signifigant tax advantages. When the lease is over, you simply drop the car off and move on. Consumer Reports weighs the cons to leasing a new car While there are a lot of benefits to leasing a new car, there are also some disadvantages that should be made aware of. Consumer Reports has a few negatives that come with a lease on a new car. At end of the lease period, you usually end up paying more for the vehicle than you would with a loan. This is because the first few years of the life of the car are also the years where it depreciates the most.If you jump from one lease to another, the montly payments never end. In comparison, keeping the vehicle after the loan is paid off will give you more value overall. The best option is to buy the vehicle and keep it until it isn\\u2019t economical to keep it any longer.Leasing a car comes with some stipulations, like miles. If you go over these specified miles, there is a penalty. That usually means paying for every additional mile. You don\\u2019t get a refund for unused miles.You have to keep the vehicle in good condition and follow through with maintence. If you don\\u2019t, there will likely be fees to cover the damage or whatever else might have happened. Especially if there is a lot of damage. If you decide not to continue with the lease for one reason or another, there will likely be a lot of fees associated with that decision. These are called early termination fees and will be due when you end the lease. These fees can amount to the cost of the full lease.You still have to pay for items like tires, which are an added cost depending on the type of vehicle. If you get a more expensive or larger vehicle, the price of tires can be a lot. The decision to lease a new car comes down to personal finances Save money on your new car lease with these tips. https:\\\/\\\/t.co\\\/nwXbyaOaYe\\u2014 U.S. News Cars (@USNewsCars) February 15, 2022 Related Ask Edmunds: Should I Fix My Old Car or Buy a New Car? Consumer Reports says leasing makes more sense for some people at the end of the day. It can get you into a nice, new, safe car that you might not be able to afford otherwise. It can also offer lower payments in some situations than buying the vehicle outright. Leasing a vehicle can also help you build credit if you make payments on time. It is pretty simple, and while you have to take the car in for maintenance, you don\\u2019t have to pay for it. However, leasing doesn\\u2019t always make sense for people. If you have saved up and have found an affordable vehicle, leasing might not be the most budget-conscious choice. These days, buying a new car outright is more expensive than ever, though. If you are in this position, try making your pros and cons list like the one Consumer Reports made. Weigh out the pros and cons of your situation and financial situation to see which option makes more sense. Either way, hopefully, you get into a safe new car that you can afford. 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