As you enter a dealership beautiful vehicles are gleaming at every corner.  Walking trance like from car to car, you are approached by a “Sales Person”.  Words ooze out of the sales person mouth, each one sounding more and more enticing… making you want everything.  “Come with me” she says as she ushers you into the Business office.

As you sit down a man spins around in the chair, his face is ghastly white and his smile is entrancing.  Numbers mesh together as he quickly punches them into his computer and prints out the contract; mindlessly you sign on the dotted line.

Driving home, you slowly start to remember the conversation with the business manager: “Hazard Insurance, Wear and Tear, Disability, low mileage, reduced interest rate, open ended contract..”    Suddenly you’re feeling light headed as you realize that this beautiful new car has put a giant hole in your bank account.   Was it your imagination or did the business manager have fangs and a black cape?

Business managers do not have to be vampires that will suck each ounce of money from you.   In order to avoid the vampire, the consumer needs to stop being the zombie mildly accepting whatever price is quoted.   Welcome to LeaseMonster where it is our job to awaken you from that zombie state by empowering you with knowledge.

LeaseMonster’s main objective is to help take away the fear from leasing.  We aim to do this in two ways:

1)      By informing the consumer. Knowledge is power: we believe that the informed buyer is always the best buyer

2)      By creating a social network of similar shoppers ensuring that everyone receives an equitable and fair deal.

Knowledge is Power

Why do so many people rush into leasing a vehicle without taking the time to become an informed shopper?  Is it out of necessity or do they get pulled in by the glamour of having a new vehicle?  Cars are and should be glamorous and they are a necessity.  However, there is no reason that you should pay more than market value for your vehicle.

It has always amazed me, that the indecisive buyer often gets the best deal.  Why?  It’s quite simple: the dealer wants to make a sale as quickly as possible.

The LeaseMonster community has a few areas which will assist you in becoming an informed shopper:

1)      Lease 101: this section will provide you with general information on leasing from lease terminology to dealer beware.

2)      The forum section is the area for you to discuss your experiences or questions about leasing

LeaseMonster: Unite and Save

You drive to work in your brand new vehicle: you are exhilarated by the car, the color and the style.  During a conversation with your coworkers you discover, that their neighbor leased the same vehicle from the same dealership this week for $50 less a month.  How did this happen?

Well it happens every day.  Dealerships do not have a set price per vehicle.  Did the dealership increase the acquisition fee and pocket the profit?  Was the licensing fee the correct amount? Was there a calculation error?  Did they give you the best rate for the car?

The typical dealerships deal with customers on a one to one basis.  This puts the onus on the customer to ensure that they are receiving the best deal.  Even the most informed consumer may walk away with a less than ideal price.  Why? The dealer’s main objective is to make money.

LeaseMonster will ensure that you never shop alone again.  Our goal is to unite similar shoppers together and increase your buying power.   You will be desirable to dealerships because they will want that multiple sale.   Dealers will want to work with you.  They will seek you instead of you having to find them.

Instead of being alone trying to figure out the numbers, you will have entered a social network where you will work together to get the best deal.  The dealers will place bids on the price that they can offer to the group.   As a buying group, you will decide which price and bid you would like to go with.    With LeaseMonster you will be a confident shopper : knowing that you received the best deal for that beautiful new vehicle.

Fair Prices for All

It is our goal to promote a proactive lease process by creating a lease social network.  We encourage continual communication. Let us know the prices that were quoted to you by dealers.  Use our forums to discuss any questions or concerns.  Dealers feel free to advertize what you can offer the customers.

Remember awareness is power. At LeaseMonster we strive to provide an equitable market place and an information site to assist you with leasing your next vehicle.  Happy Driving.

• Leasing gives you the opportunity to drive a newer car with a smaller monthly payment. In many instances, you can drive a much more expensive car than what it would cost to buy a cheaper car, which will lose its value much quicker.
• Leasing your car gives you more extra cash to invest in other purchases. With the high price of buying new cars, most lease payment are couple hundred dollars less per month than what a car payment on a new car would be.
• Without having to worry about putting a large down payment on an expensive new car, you can be driving a new car without spending a lot of money initially. In addition, the sales tax on a leased car can be added into the monthly payments.
• If you use your car for business purposes, your lease payments may be tax deductible, which may be helpful since they will no longer allow consumers to deduct interest on car loans.
• You have much more flexibility with a leased car since there is no trade in when the lease term is up. But, you can still choose to buy the car at a price that was predetermined at the start.
• You have a wider selection of cars when you lease because leasing companies are able to order cars from many dealerships.
• Leasing is much easier than shopping for a new car to buy. With the internet so readily available, almost all of the shopping for the lease can be done online as well as looking for the most competitive rates from banks, leasing companies and car dealerships.

Leasing used to be very rare with only certain individuals being able to lease. Most of the time it was the more influential individuals that were able to lease cars. This has changed a lot in recent years with leasing terms much more flexible and affordable for individuals. Many individuals that want a great selection of cars to choose from and want to shop at their convenience are doing their lease shopping on LeaseMonster.

LeaseMonster is a lot like a social gathering or network online, much the same as the popular Facebook or MySpace. The only difference is that LeaseMonster is for auto lover and auto shoppers looking for cars to buy or lease. With the exception of it not being an auction site, LeaseMonster is similar to EBay in its efficiency at finding what the shopper is looking for quickly. Although EBay has thousands of things on their site, you don’t have to spend hours going through them to find the one thing you want. You type in what you want and the results are filtered and sorted into what you’re specifically looking for. This is the same efficient manner in which LeaseMonster operates.

You don’t have to go through page after page of different cars that are half way across the country to find the car you’re looking for in the region you’re interested in. This highly effective searching mechanism on LeaseMonster is called the Car Communities page.

The Car Communities page is the heart of the site as it’s a social market page where people from all over the country gather to look for cars they’re interested in buying or leasing. The thing that makes the community page so special and interesting is that users don’t have a helter skelter search. The searches and “social gathering” is narrowed down to specific cars for specific regions. For instance, if you’re from Wisconsin and are looking for a black Pontiac Grand Prix GTP, you’ll be on a community page that centers on that specific criterion. Any shoppers that are interested in black Pontiac Grand Prix GTPs in Wisconsin will be members of this specific group.

Once you find the car you’re looking for in your group, you can further filter your search on the bottom of the page where you’ll find other more specific details or sub groups for your chosen car. The sub groups will give you other options to fill out such as:

• Do you plan to lease or purchase
• What region you’re in or wish to buy/lease the car
• How many miles per year you plan to drive the car
• How much money out of your pocket you’ll spend
• The length of the lease you’re looking for

Although LeaseMonster sounds like a social network just for consumers and private parties looking for specific cars, it’s much more than that. LeaseMonster is also for car dealerships that are offering cars for lease or purchase. The Car dealerships will register on the LeaseMonster so they can then do business. Registration entitles them to make bids to try to earn the group’s business. If they earn the bid, they have the option of getting the business from any individual that’s interested in cars in that group.

Car dealers and users can also use the community page to discuss the cars, make comments, show videos, images or pictures, ask or answer questions as well as give ratings or reviews on the cars. Users will find many car recommendations and car specific ads as part of the community page. If one user has previously leased a specific car and had a bad or good experience with the car or dealership, they would be able to post and discuss their experience here.

Leasing a car on LeaseMonster couldn’t possibly be any easier. After all you information is entered into the site, all your lease details will pop up showing what your lease deals would be for the specific car. All deals are subject to credit approval, however, just like in any lease or purchase situation.

There are many other interesting features on LeaseMonster. Some of these are FAQ section where new users can get information, sections to schedule test driving a car or sections where you can get a quote or more information. LeaseMonster has everything auto lovers enjoy seeing when they’re looking for a new car. It’s truly a car-lovers paradise.

Leasing a new car can be very exciting and fun, especially if you’re doing it for the first time. However, even though you may not be putting out as much money initially as if you were purchasing a new vehicle, you are still leasing a vehicle and will be spending money and signing a contract. Like any legal binding agreement, it can be somewhat scary and you’ll want everything done right. You may even want to get some advice from others that have more knowledge or experience than you do regarding leasing or buying autos. This is where LeaseMonster will come in very handy. You’ll find that LeaseMonster is probably the most helpful tool you’ve ever experienced for helping you find the car of your dreams.

LeaseMonster is a type of social network for people looking for vehicles to buy or lease. The entire process can be done here at LeaseMonster. There are many things about LeaseMonster that make it very unique and special besides it being an online site. The town where you live may have many different car dealerships but if you’re interested in once specific make and model car, you may have to travel to different locations to find what you’re looking for. Each dealer is going to be selling only certain makes and models of vehicles. This is where LeaseMonster is different.

LeaseMonster is where both consumers and new vehicle dealerships meet for their mutual interests: buying, selling and leasing vehicles of specific make, model or color/trim in specific regions of the country. LeaseMonster is like your one-stop shopping for cars of your choice in the area you want. It works in much the same way as when you’re looking for a car in a certain region. You type in the kind of car you’re looking for and in what city/state and dozens or more results will pop up. LeaseMonster, however, is much more organized and filtered.

LeaseMonster consists of many different groups, each one for a different car and region. For instance, you’re from San Diego and you’re looking for a red Pontiac Grand Prix GT. You would register in that group and all the cars that meet that description in San Diego would show up in that group. They may be for sale, lease or both. New car dealerships would then register for each of these groups that they wish to do business with. Registering gives them the privilege to bid on earning the business of this specific group. The winning bidder is the dealer that will handle the leasing of these vehicles in this group.

Everything can be handled on LeaseMonster from finding the car you want right through doing a credit report, scheduling a test drive of the car and getting the actual lease on your chosen car. Any information that is needed can be taken care of through LeaseMonster. Right below the area where your selected car is shown, you’ll find many sub groups that are more car specific. These sub groups are for your additional information including miles you drive each year, any down payment amount, whether you wish to lease or buy and term of lease desired.

The website for LeaseMonster has many other interesting features. Some of these features or “lease tools” include:

• A FAQ section where any and all questioned can be answered
• A section for scheduling a test drive for the car you desire to lease
• Make an offer section
• Compare vehicles
• Lease Details
• Photo Gallery
• Request more info
• Incentives

Almost anything you could possibly want in an online car dealership you will find at LeaseMonster. It’s important to realize that even though it’s an online site where everything can be taken care of through LeaseMonster, the same steps will apply that would apply with any lease such as checking out your personal credit. A lease agreement requires the same type of credit report as you’d have if you were purchasing or leasing a car through a traditional dealership.

Having good personal credit is very important any time you’re requesting something on credit. When you’re leasing a vehicle you are requesting credit in terms of your monthly lease payments. An individual with less than desirable credit may still get approved for a lease but the results of their credit report may affect their monthly payment and down payment. Individuals with poor credit that are approved for a lease agreement are often required to put down a large down payment, which may affect their down payment. The professionals at LeaseMonster can help you with any questions or concerns you may have regarding personal credit and leasing your vehicle.

The community page on LeaseMonster is much more than just a place to view cars you want to lease or buy. In addition to viewing and leasing, you can get information on the cars you’re looking at as well as feedback from other viewers. Users ask and answer questions with each other, share videos, images and photos as well as rating and reviews of specific cars. If one user has leased a specific vehicle that another member is interested in, the first user can share his experiences with that car on the community page. You’ll also find many recommendations and ads for specific vehicles on the community pages.

You’ll love the friendliness and helpful “friends” you’ll find on the community pages at LeaseMonster. It’s so unlike when you go to a dealership and don’t know a thing about the car and know no one there other than the dealer who’s trying to talk you into taking the car. Here, at LeaseMonster, you’ll have more than your share of helpful hints, tips and advice to help you with your decision or answer any questions you may have involving different cars.

If you’ve ever visited MySpace or Face book, you have some idea of what LeaseMonster is all about. The only difference is that LeaseMonster is all about vehicles-not just vehicles but specific vehicles that you’re interested in and in your area. It’s like the site was made just for you.

You’ve decided that you want that new vehicle, and in order to reduce your lease payments you would like to use your old vehicle as a trade in.

Here are a few things to remember:

1)      Similar to a down payment a trade in on a lease will strictly be used to reduce your monthly lease payment.  You will not gain any equity from this vehicle nor your new vehicle as you are not purchasing the vehicle.

2)      A dealership will buy your vehicle for its wholesale value.  This will be less than you would receive by selling the vehicle privately.

So why not sell your vehicle privately, and use the profit as a down payment.  You absolutely could do this however depending on the state that you live in you will need to pay for some items up front such as: a smog test, transfer fees, advertizing and repairs for minor problems.  In addition you should become well versed on your state regulations and the current selling price for the vehicle.

If you have the time to research, advertize and sell your vehicle, you will usually make additional profit than you would if you traded in the car at the dealership.  However, a lot of people want to quickly get into their new car and don’t have the time to invest in selling their trade in.

So if you’ve made the decision to trade in your vehicle, you still need to do the following items:

1)      Find out the wholesale value of your vehicle, talk to different dealerships, obtain information from blackbook or look at the NADA guide to determine what your vehicle is worth.

2)      Complete any minor repairs and get your car detailed.  You want to gain the most value for your vehicle and therefore you want the dealership to be left with the impression that they are purchasing a well cared for vehicle.

3)      Complete each negotiation transaction separately.  Finalize the price for your new vehicle and then begin the negotiation for your trade in.   You want to make sure that you receive the best price for each vehicle, and combining the two negotiations can become very confusing.

4)      Take your time and stay in control.   Ensure that you are getting a deal that your comfortable with before signing the final lease agreement.

Using a trade in toward your lease can be a quick and easy way to reduce the cost of lease payments.  This can be a particularly desirable solution when you don’t have any additional money to invest for a down payment.  In addition, the time invested in trading your vehicle in will be substantially less than selling your vehicle.  However,  take the additional time to find out the true value of trade in before making the final decision.

The amount of insurance products available for your vehicle can be overwhelming.    Each dealership will have an opinion on which product is the “must have” insurance.   Be cautious: as at times the “must have” product is really the one that pays the dealership the most income.    This article will attempt to dissect the main “add-on” products that are available for your vehicle.   To determine which one is right for you, you will need to become informed on what is covered in the limited warranty and if you decide to purchase it, the extended warranty.    Duplicating warranty coverage is equivalent to flushing money down your toilet.

Tire and Wheel Insurance:  This is one of the fastest growing insurance trends in the automotive industry.  The majority of auto insurance companies will not pay to replace a tire that has been damaged due to road hazards.  This is where tire and wheel insurance or what is also called road hazard insurance comes in. Tire and wheel insurance will cover the repair or for a replacement of a tire that is damaged due to road hazards.   The details of what is considered a road hazard will vary from company to company.  Read the policy carefully and find on what conditions need to be in place in order for a tire to be replaced.

Here are the facts:

• The cost of tires can range anywhere from $150-$700 depending on the make and model of your vehicle.
• High performance cars typically use low profile tires to accommodate for larger tires. This places additional stress on the tires putting them at an increased risk for damage.
• The insurance will not necessarily be transferred to replacement tires
• You may have to replace your tires due to wear and tear before a problem occurs
• Some companies will not replace or repair a tire if it’s been damaged below a certain tread depth
• There may be a limit on the cost of the tire replaced which may not cover the cost of your vehicle’s tires
• If you purchased extended warranty, it may already include road hazard insurance policy

Road Side Assistance:

This product is exactly what it sounds like: it will assist the driver out of unexpected circumstances that occur on the road. This product usually covers towing, out of gas service, replacing your flat tires, unlocking your vehicle, and accident/collision assistance.  However some road assistance companies will also assist you before you get on the road. This unique trip planning feature may provide you with maps, and ideas for restaurants and hotel accommodations saving you both time and money.

When looking at purchasing this product find out:

1)      The area where services are covered: most are at least national if not all of North America.  However, smaller companies will have a limited range of coverage

2)      Is this already covered in your warranty? There is no point in duplicating the product.

3)      Does it cover all drivers of the vehicle? Or only the primary driver?

4)      What is the length of term for coverage? If the term expires during the duration of your lease how can you renew it?

Windshield Replacement Insurance:

The majority of auto insurance companies will cover the cost of replacing your windshield.  However, some customers do not like making a claim for something so minimal.  This type of insurance will cover the repairs and damages that could occur to windshield.

LoJack/Boomerang:

Lojack/Boomerang is a vehicle recovery system working with radio frequencies.  As far as theft protection goes, this product has a high success rate in recovering the vehicle after theft has occurred.   Once you purchase the system a small radio frequency transceiver is placed in your vehicle.   Each receiver is linked to the particular VIN of the vehicle.  In the case where your vehicle is stolen, the police would input the Lojack code linked to your vehicle activating the inaudible single.  Police vehicles that are equipped with the Lojack system would listen to the signal to locate and ultimately recover your vehicle.

Approximate cost: $695.00 plus installation

Benefits:

1)      Discounts available through some auto insurance companies this will vary according to State regulation.

2)      Limited warranty for 2 years, if vehicle cannot be located within 24 hours, the cost of Lojack will be reimbursed

3)      Recovery rate of 90% over the past 15 years

4)      Difficult for thieves to locate the receiver  and no signs that receiver has been installed on the vehicle (i.e. external antennae)

Disadvantages:

1)      Cost prohibitive in areas where car theft may be a minimal issue

2)      Vehicle specific: cannot be transferred to your new lease

3)      Lojack will not be activated until the vehicle is reported as stolen

Excess Wear and Tear Insurance:

In a leased vehicle, you are liable to pay for any damage that is evaluated as excess wear and tear.  Insurance companies will cover any major damage that occurs due to an accident.  However, they will not cover the typical dents and nicks that may occur on your daily drive.  Excess wear and tear insurance is available to pay for those damages at the end of your lease.

The typical company will cover:

• Scratched and chipped paint.
• Stains and spotting of upholstery and carpet.
• Tires.
• Dings and minor dents.
• Chipped glass.
• Wheels and wheel covers.
• Lenses of headlamps, rear lamps, and fog lights; tail and turn signals and brake light lenses; sealed beams, halogens and incandescent light bulbs.

Advantages:

1)      Peace of mind at the end of your lease

Disadvantage:

1)      Cost of product may be more than cost of repairs

2)      Not all damages will be covered: for example it will not cover missing or mismatched parts.

Maintenance:

This package will typically include a slightly reduced price for a series of maintenance services completed at the dealership.   Commonly these packages will include a set of service treatments that will carry you through a portion of your lease contract.

Advantages:

1)      Typically factory approved: ensures that you complete the maintenance as it has been prepaid

2)      Slight cost savings if you were intending  on completing your service at the dealership

Disadvantage:

1)      Reduced options on where service can be completed.

2)      Will not necessarily include all maintenance issues that may arrive.

Add on products are an attractive alternative to extended warranty.  The product is typically less expensive and targets a specific coverage.  The intention of add on products is to enhance your leasing experience.  Ensure that the product that you choose to purchase is beneficial to you.

A sales person is basically your real estate broker for a vehicle.  They will show you all the available models, point out the highlights and features and work until they find the best car for you.   A good sales person will use their expertise to match your needs and wants to the appropriate car.

Once you’ve selected your vehicle you will be introduced to the business manager.    The sales representative may have committed to a price for you: the business manager will outline exactly what that price will include.

In the business office, you may discuss other options such as warranties, various insurance options to protect both you and your vehicle, and other items that you may want to add on to your vehicle.   This is the area where your deal is finalized and your contract is printed and signed.

The business manager will:

1)      Determine the capitalized cost of the vehicle with you

2)      Discuss  the terms of the contract

3)      Discuss any additional items that you may want to finance on your contact such as rust proofing, wear and tear insurance and extended warranty

4)      Finalize the lease paperwork for you: this includes completing a credit application, taking a copy of your driver’s license and finalizing the vehicle licensing for you.

5)      Take the final negotiated lease agreement price and sell the title to the leasing company

6)      May accept the vehicle at the end of the lease on behalf of the leasing company

Once the contract is signed, the business manager will submit all paper work to the leasing company.  In essence he is now selling your vehicle to this company and they are buying your contract.  From this point forward, you will discuss any concerns/questions that you may have about the contract directly with the leasing company.  The role of the dealer is now limited to discussing any concerns or questions you may have about the vehicle itself.

The leasing company will:

1)      Hold the title of the vehicle during the term of the lease

2)      Collect the lease payments as specified in your lease agreement

3)      Discuss any lease termination options with you

4)      Handles the lease end options: whether you are purchasing the vehicle, returning it or extending your lease agreement.  In some circumstances, the dealership may assist you with this process.

Summary

Most vehicle manufacturers have their own finance company which often offers preferred and reduced rates to consumers.  As a direct result, captive finance companies are often the company of 1^st choice for dealers.  This can create some confusion for the consumer as they assume that the leasing company has some control over resolving problems with the vehicle.  This is not the case.

Your responsibility to the leasing company is similar to your responsibility to your mortgage broker.   If your roof starts to leak, you are not going to call your broker nor would you stop your mortgage payments.  The bank is not responsible for the quality of the house; they simply ensure that the house is being paid for on a monthly basis.

The exact same applies for your leased vehicle:  if there is a problem with your vehicle you’re leasing company cannot remedy this nor should you stop your lease payments.  All payments need to be made to the leasing company regardless of whether or not the car is driveable.  If there is any concern with the vehicle itself, you should deal with the dealership directly.

Ultimately, the dealership and the captive finance company are working together to ensure that you are a satisfied customer.  Although they each have specific roles in the lease process, you will find that most good dealers will be willing to assist you with any questions that you may have in regard to your contract.   Remember, with a leased customer the dealership has a vested interest in ensuring that you are satisfied.     At the end of the contract, you will be getting into a new vehicle and a good dealer will strive to maintain your business.

One of the biggest misconceptions with leases is that you are paying an interest rate. This confusion is partly due to advertizing and partly due to a lack of understanding of how leases worked.

Dealers will not explain this to you for a few possible reasons:

1)       They believe it’s a complicated term to explain and it will take up too much of their time.  Remember most dealers receive commission and time is money.

2)      They erroneously believe that once you understand what a lease rate really is you may choose to not sign the contract.

3)      They do not understand how the calculation works themselves and so struggle explaining it

Here is the reality: making you, the active consumer knowledgeable about leases will make you a much more confident car buyer.  You will begin to understand what a lease truly is and ensure that your contract is fair.

What is a lease rate?

A lease rate is an advertisement tool that finance companies and dealers use.  The term lease rate continues to be used to make it easier for you, the consumer to understand.

In reality, leasing companies do not have lease rates but money factors.   However, it’s a lot nicer to advertize : Lease a vehicle for 2.5 % a month, than lease a vehicle for the money factor of 0.00104.  This being said, lease rates will continue to be used in advertisements feeding into the confusion.

So what is a money factor?

A money factor is a co-efficient used to calculate the amount of service charge that is owed to the leasing company.  This is the primary means that the leasing company receives their income.

How is a money factor calculated?

The calculation for a money factor is fairly simple:

The Annual Percentage Rate (Annual Lease Rate)/2400= money factor

For example:

2.5%  divided by 2400=0.00104

What is the service charge based on?

Most individuals make the incorrect assumption, that you are financing the depreciation portion of your lease.  They assume that a lease rate is calculated similar to a loan and can be amortized over the term. This is in fact incorrect.

A service charge for a lease payment: is exactly that, you are paying for the service of borrowing (or renting) the vehicle.  This charge is a fixed amount per month.

Here is how it is calculated:

Capital Cost of the vehicle + Residual Value X Money Factor X Lease Term

For example:

Capitalized Cost: 40000

Residual Value: 18700

Money Factor: 0.00104 (2.5 APR)

Lease Term: 36

40000 +18700= 58700

58700*0.00104= 61.05

61.05*36= $ 2197.80

Based on this example, the lessee would be paying the service charge amount of $2197.80 to the finance company.

Why is the capital cost and residual value added together, shouldn’t it be subtracted?

Remember leasing is not financing; so the money factor is not based on the amount that the vehicle will depreciate during the term of the contract.  In fact, you are paying the leasing company or financial institution a rental fee for using this vehicle.  The way that they calculate this rental fee is by adding the capital cost plus the residual value.  Not subtracting it.  This is the standard process for all leases.

The reality is that is rare that you will be able to change the money factor.  However, it is important that you receive the best rate for the vehicle you are purchasing.  Typically, captive finance companies provide better rates than subprime lenders.   This is because the finance company has a vested interest in you purchasing a certain type of vehicle.

Some other key notes about money factors and getting the best deal:

1)      The higher the demand for the vehicle the higher the rate.  Manufacturers do not have to put deals on vehicles that will sell themselves

2)      The lower the demand, the better the rate: Look at previous year models or models that are no longer in “style”.

3)      Know your credit rating and try to maintain a positive credit score: Sub prime lenders rates will always be higher than captive finance companies as they have increased risk in lending you money.

4)      Ask the dealers if this is the best rate that they can get on the vehicle: the dealer may have another lender that they are reluctant to use because they receive less income from them

5)      Shop near the end of the month or in off season when the dealers are hungry to make a sale and are more likely to offer you a better deal.

6)      Double check the numbers and the calculation

7)      Check the captive finance website and see if the numbers the dealer provides you matches or are lower than that on the web site page.

Remember leasing should be a positive experience: one of the best ways to ensure this is by becoming confident with some basic information.  Ask lots of questions and enjoy the leasing experience.

Your payment date is coming quickly and you don’t have enough money in your account.  What do you do?  Sometimes no matter how well you plan ahead, there may be a time where you cannot make the lease payment on your committed date.   If you find yourself in this situation, be proactive.

Most financial institutions have conditions in place to assist individuals when they cannot make their lease payments.  The company may be able to delay your payment for a period of time, allow you to make smaller portions of your payment or provide you with advice to assist you in getting out of the collections situation.   One of the crucial things about being proactive, is that the financial institution is aware of what is going on in your life.   If you do not contact the company, it is much more likely that the problem will become escalated.  An escalated problem could result in the company reporting the problem to the credit bureau or even worse repossessing your vehicle.

Once a payment gets past thirty days past due it is typically reported to the credit bureaus.  Some companies have an automatic reporting system, others manually report the past due payment to the bureaus.  This being said, you want to ensure that you keep your payment under 30 days past due.

In the United States there are three credit bureaus: Equifax, Experian and TransUnion.   Typically the financial institutions, will choose one of these bureaus to automatically report to and in situations where a customer is delinquent they may manually report to the other two bureaus.

The credit bureaus are simply a reporting agency.  They take the information that they have received from creditors and record this information on the bureau.   If there is a reporting error, you will typically need to address this with the creditor first and then the creditor will amend the problem with the credit bureau.  However, there are some circumstances where you will want to contact the  credit reporting agency directly.  These circumstances include but are not limited to:

1)      Identity theft

2)      A situation where you wallet has been stolen

3)      Merging two credit bureaus: married name and maiden name

4)      Separating credit bureaus: this occurs at times with child and parent when the names are identical

It is always a good idea to periodically request a copy of your credit bureau.  You are permitted by law one free credit report per year from each reporting agency.  Receiving your credit bureau will give you the opportunity to resolve any errors that may have occurred.   The following are the regulations  to request a report and how to resolve an issue with each of the credit bureaus in the United States.

Equifax

To request your credit bureau you have a few options:

1)      Go to www.annualcreditreport.com

2)      Call 1-877-322-8228 OR

3)      Complete the Annual Credit Report Request Form available on the Equifax website (www.equifax.com)  and mail it to:

Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281

To resolve a credit reporting error or concern:

Request a current copy of your credit report.  Upon receipt of the information you may request an amendment using one of the following methods

1)      Online at www.eqifax.com.  Almost all credit reporting errors can be requested to be amended online  with the exception of any disputes in regard to identity.

2)      By phone: Equifax will provide the phone number to amend your bureau on the credit report that you requested.   The call centre will assist you with any questions that you may have and provide you with directions on the next step to take.  In situations where you may be disputing identity information on the bureau, they may request that you send verification via fax or mail.

3)      By mail Write to:

Equifax Information Services, LLC
P.O. Box 740256
Atlanta,GA 30374

Transunion:

To request a credit report, transunion will provide you with the following options:

1)      The free annual credit report through www.annualcreditreport.com

2)      A variety of additional credit reporting options including detailed analysis and credit approval predictors through www.truecredit.com

3)      By phone: 1-877-322-8228

4)      By mail: download the form on the transunion website: www.transunion.com and mail it to:

Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281

To file a dispute about your credit file, the following process is available to you:

1)      Online at www.transunion.com .  This website will allow you to view your report and file your complaint immediately through the online tool.

2)      By phone at either of these numbers depending on the nature of your dispute:

To Dispute an item on your credit report: 1-800-916-8800

In the case of identity theft Fraud Victim Assistance Department: 1-800-680-7289

3)      By mail: Complete the online form available on their website: www.transunion.com

Once you file your dispute, Transunion will contact the company with whom you have the dispute with.  Typically a complete resolution of your file will take 30 days, and transunion will send you the results of your dispute by mail.

In a situation where fraud or identity theft may have occurred, you would mail this investigation to: P.O. Box 6790 Fullerton, CA 92834

Experian:

To request a credit report Experian offers the following options:

1)      The free annual credit report through www.annualcreditreport.com

2)      A variety of additional credit reporting options including detailed analysis and credit approval predictors through www.truecredit.com

Disputing your credit report from Experian:

1)      Experian provides an online link to disputing your credit report with them.  This is available on their website www.experian.com.    Once you click this link, the website will walk you through the online disputing process.

This is the only method to dispute your credit report through Experian.

Maintaining a positive credit rating should be one of your top priorities.   If you continue to lease vehicles, you will be requesting credit every 3 to 6 years.   By making your payments on a timely manner you will not only stay out of delinquency, but you will also increase your credit score.  Keep track of your credit rating and score by requesting an annual report from each of three agencies.  Remain informed, make your payments on time and enjoy the positive benefits from having a good credit rating.

One of the benefits of leasing is that you only pay for the time period that you are using the vehicle.   In a closed ended lease, you have minimal if any expense at the end of the lease and can return the vehicle.  This being said, why is it important to know how residual value works?

Where does the residual value come from?

The captive finance companies provide the predicted residual value for the vehicle.  This number cannot be negotiated at the dealership level.   Researching market trends and vehicle experts such as Black Book and the Annual Lease Guide help the finance companies arrive at the predicted future values of vehicles.    The finance company will strive to do two things: maintain strong residual values and make accurate predictions of the future residuals to reduce potential losses.

The higher the residual value is the lower your monthly lease payment

Residual values are typically higher in new vehicles or vehicles that hold strong market value.  As a lessee this will work for your benefit.    You are responsible only for the portion of the vehicle that is not used, if the residual value in 3 years is gauged at 60% of the current value of the vehicle: you will only pay for 40% of the vehicle.

However in situations where the vehicle may be an older model or due to current market trends the vehicles are no longer desirable (Think SUV’s and high gas prices), the residual value will decrease.  In these situations, the residual value may be estimated at 40 or 35% of the value of the vehicle.  This would mean that you would be responsible for 60 or 65% of the value of the vehicle during the 3 year period.

When can a higher residual value work against you?

If you have signed an open ended lease agreement, you will be responsible for any potential negative difference between the residual value and the market value.  If the market trend changes during the term of your lease, you may owe money at the end of your lease term.

When can a lower residual value be advantageous?

1)      If you were thinking of potentially purchasing the vehicle at the end of the lease, it may be to your benefit to have a lower residual value.

2)      In an open ended lease where the market value of the vehicle has increased over the predicted residual value.  In this situation you could make a profit off of the vehicle.

What can I do about residual value?

Become an informed consumer, know the market trends and purchase the vehicle that has the best value for you.    The dealerships will be unable to alter the residual value percentage, however they can help you determine which vehicle is best suited for your needs.

In Residual values 101 we covered the basics of residual values and how it will have a direct impact on your lease. But did you ever wonder where these numbers came from?  This article will describe how two of the larger residual value companies: Black book and Automotive Lease Guide get their numbers.

Black Book:

Company History: Established in 1955 in Georgia,  by 3 business men who regularly attended auctions.  At the auctions, the men would  maintain a written record of  the prices that vehicles were being sold  giving them a better gauge on what the vehicles were worth.

After a while, other auction goers inquired about their hand written sheets of papers and requested copies .  Black book had now begun.   Today the individuals from Black book still go to the market to get the true prices that vehicles are being bought for at auction.  Over 50 auctions are attended on a weekly basis nationwide, giving the manufacturers a gauge on how their vehicle may be depreciating over the years.

Where they get their numbers: To give an accurate image of what the residual value will be the company reviews the going rates at auctions.  These figures are then compiled and by reviewing the auction trends of models of cars, they will predict the future residual value.   Black book has an online guide of residual values and market trends which is reviewed and updated on a daily basis.

The logic behind the numbers:

The more a vehicle is seen at auction, the less it will sell for.  For example: if there are 100 of the same vehicle sold that day they will bid less than if there were only 20.  Vehicles that are in high demand will typically secure higher residual values, as dealers will bid higher.

Automotive Lease Guide:

Company History: Established in 1964, the company’s focus is to forecast residual value trends by reviewing the market impact of a variety of trends.  Some of the trends that the company looks at are predicting accurate MSRP, the effect of incentive programs, economic trends and marketing trends for vehicles.

Where they get their numbers:

Automotive Lease Guide believes that all decisions made within a product lifestyle have an impact of the residual value.   The company provides a variety of tools to manufacturers that will help them predict residual value.  Their software program allows the car companies to customize their residual values according to current market trends.  In addition, they will receive the ALG residual value guide 6 times a year which will provide a residual value prediction.

The logic behind the numbers:

Traditionally,  ALG  had based their numbers on the used car trends.  However, they are now finding that looking at the sales of new vehicles is a better predictor of residual value.    One of their philosophies is that incentive programs negatively impacts residual values in the short term because it diminishes demand strength.   ALG believes that the more that a vehicle is in demand the stronger it’s residual value will be.

Summary:

Most financial institutions will use one of the two models indicated above to predict their residual values.  As a consumer, you have little impact on what the residual value is.  However, you do have an impact on what you buy and the amount that you purchase it for.   Familiarizing yourself with how residual values are arrived at, will help you fully understand the entire lease process.