True or False:
1. The automobile industry expects that more than 30 percent of new car deliveries will be leases in 1997.
2. When you lease a car, the dealer retains the title (the dealer continues to own the car).
3. A car dealer can usually choose from about 8 different funding sources for leasing.
4. When you lease a car, the lessor/dealer is responsible for maintenance.
5. If you lease a car with a 36,000 mile limit, you can turn it in anytime the odometer is near 36,000 miles.
6. If your leased car is involved in an accident and totaled, the dealer/leasing company's insurance will cover the costs.
7. If you get a parking ticket and don't pay it, you may find it added to your end-of-lease charges.
8. Since you don't own the car when you lease, the dealer/lessor pays for the registration and license fees.
9. Insurance for leased cars is usually more expensive than for owned cars.
10. If you decide to purchase a car you are leasing, you pay the difference between the capitalized cost (base price of the car) and the amount of payments you've already made.
ANSWERS:
1. TRUE. In 1987, 5.3 percent of all new cars delivered were leased. That increased to 15.2 percent in 1992, 29.6 percent in 1996 and is expected to come in around 32.6 percent in 1997.
2. FALSE. The car is sold to a leasing company, which in turn leases it to the consumer.
3. TRUE. The dealer usually, but not always, has a choice of leasing companies. You need to ask if this is the best financing deal, instead of accepting the deal presented as the only possibility.
4. FALSE. The consumer is responsible for oil changes and lube jobs. Major problems will be taken care of by the warranty - if the car is still under warranty.
5. FALSE. Even if you turn the car in early, you have to make the monthly payments until the end of the lease, according to your contract.
6. FALSE. Your insurance pays - and not always the full amount. Most insurance pays on a curved depreciation scale, but leasing is done on a straight-line depreciation scale. There could be a wide gap between the two figures, which is why gap insurance that pays the difference is often a good idea.
7. TRUE. These charges can be added to your end-of-lease costs.
8. FALSE. The consumer pays.
9. TRUE - depending on what you usually pay for insurance. The lease usually requires higher minimum requirements and different terms than the average consumer policy. If you already have that higher coverage, insurance costs will be the same.
10. FALSE. You pay what the purchase price is, a figure that is included in your lease. Sometimes there are also extra fees. Moreover, if you take out a loan to pay for the car, it will be a used-car loan (usually with higher rates than a new-car loan).