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Current tax law considers many of the expenses of a lease car used for business to
be tax deductible.
Disadvantages of Leasing
When the lease ends, you have built up no equity in a vehicle. You have nothing to
trade in on a new car, so you will probably lease again.
If a lease runs longer than the vehicle's warranty, the lessee may have to pay for
repairs that would have been covered.
In most cases, leasing is more expensive than buying on credit.
Maintenance requirements for leased vehicles are strict if the lessee hopes to avoid
end-of-lease charges. A lessee should honor the manufacturer's recommended
maintenance schedules and should have written receipts to prove that service was
performed as required.
Early termination of a lease may result in substantial charges to the lessee.
Steps in Automobile Leasing
Know the important questions to ask before you lease a car. There are major differences
between buying and leasing. However, the first steps in leasing are the same as those in
buying a car.
1. Collect information.
select the model you are interested in and record the identifying data
at the dealership, negotiate a fair price for the car and get a price commitment on
your trade-in
ask the salesperson to have the agreement written up as a lease
A short-term lease, up to 24 months, means larger payments and more money spent for
depreciation. A longer lease, up to 48 months, should have smaller payments, but may be less
flexible. Experts recommend a lease length that coincides with the length of the vehicle's
2. Negotiate the gross capitalized cost.
Try to negotiate a gross capitalized cost somewhere between the MSRP and the dealer invoice
price. The lower the cap cost, the better deal for the consumer. If the gross capitalized cost is
too high, tell the salesperson to cut items that increase the total cost. If the salesperson claims
that capitalized cost is a fixed figure and can't be lowered, find another salesperson. Use the
required disclosure form as a worksheet. On the form, compare the agreed upon value of the
vehicle with the gross capitalized cost to see what charges have been added.
The law of supply and demand affects leasing as well as buying. If car sales are breaking
records and the model you want to lease is a hot seller, expect to pay more. If the opposite is
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