How to keep your monthly payment low when leasing a new vehicle

With today's ever growing expenses when it comes to vehicle ownership it is essential

for you as a consumer to save as much as possible when leasing a new car. Typically leasing a vehicle is cheaper than financing one, because you as a lessee are only responsible for portion of the capital cost. Leasing covers the depreciation on a vehicle, for example: If you have a monthly budget of $300 for a new car, don't be fooled by the flash manufacture's promotions or incentives. Interest rates and cash backs only play a small role when it comes to your monthly payment. The biggest deciding factor is what we call "residual value" in the business. Residual value or "end value" is the manufacture's prediction of how much your car would be worth at end of its lease. For example if you leased a brand new Honda Civic for 48 month terms, your residual value should be around 50% of the vehicle's original purchase price. A $20,000 car maybe only worth $10,000 after four years and 96000 km.

The smart thing to do is to purchase something with a high residual or end value. The higher the residual value the lower your monthly payment will be, take this comparison for example. A brand new Honda Civic versus a brand new GM Cobalt, the Civic maybe more expensive on paper, let's say $20,000 new versus the slightly cheaper $18000 Cobalt. To the untrained eyes the GM Cobalt should carry a lower payment, but due to the much lower resell value of the GM product, you maybe paying extra $50 per month. Don't be caught up on the lower interest rates, or manufacture's promotional programs. The bottom line when it comes to minimizing your spending is to buy something that is desirable to others.

Think of the residual value the same as the stock market, if you have a desirable stock or desirable vehicle to sell. You will most likely get more money for it, and the product will be quicker to move off your shelf. When there is a demand for the brand, the residual value will remain high, but if there is no demand for the product your residual value will fall. Do your home work and research, fill out few online forms for dealers to provide you with a competitive quote. Stay with a brand that has a good reputation, reliability and resell value. You will thank yourself towards the end of the lease trust me!

This article is brought to you by SOS Car Loans, your bad credit, no credit car loan specialist. To visit us online please go to http://www.soscarloans.com

How to keep your monthly payment low when leasing a new vehicle

By: Rick Li

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