Actual Car Expenses
- Registration fees
- Lease payments
- Depreciation
- Repairs
- Gas and oil
- Garage rent
- Parking fees
- Tolls
- Tires
Leasing Lingo
Acquisition Fee A fee charged to the lessee to start a lease, which generally begin in the $400 to $500 range.
Closed-End Lease In this lease, the residual value (value of the vehicle at the end of the lease) is estimated and agreed upon in advance by you and the dealer. At the end of the lease, you won’t have to pay extra (or will receive a refund) if the car turns out to be worth less or more than the agreed upon price.
Disposition Fee A fee charged when you return your vehicle at the end of the lease, typically $350, that covers the dealership’s cost to dispose of the vehicle.
Early Termination Fee A fee charged when you end the lease before the agreed upon term is up. According to Consumer Reports, this fee can be almost as expensive as finishing out the contract.
Mileage Allowance A maximum limit you may drive the car each year without having to pay an extra fee. A 12,000 mileage allowance per year is typical on most leases, but this can be negotiated.
Mileage Fee A fee that you have to pay if your drive over the limit specified on a lease. This is often around $0.25 per mile.
Money Factor Known as the lease factor, it is the financing fee you are charged. It is expressed not as a percentage rate, but a multiplier. To determine the money factor, divide the interest rate by 2,400. For example, a 6.96 percent interest rate is equivalent to a money factor of 0.0029.
Open-End Lease In this lease agreement, you agree to take financial risk for the value of the vehicle when the lease expires. If the vehicle is worth less than expected, then you have to pay the difference at the end of the lease. If it is worth more, the dealer pays you the difference.
Payoff Amount The amount of money you have pay at the end of the lease if you decide to purchase the vehicle.
Purchase Option Price The total price that you would have to pay to purchase a leased car. This price is stated in the lease agreement.
Security Deposit A deposit, typically equaling one month’s payment, you pay before taking over a leased vehicle. You’ll get this money back if you return the car in relatively good shape.
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The fees charged by the state to provide title and registration of your vehicle. Typically cost between $200 and $400.
Depreciating value “A car starts to depreciate the moment you drive it off the lot,” warns Walters. That declining market value could hurt when it comes time to trade in or sell the vehicle.
If you use your car for business purposes, you’re entitled to tax benefits no matter whether you lease or buy. According to the IRS, if the vehicle is solely used for business, you can deduct the entire cost of operation (up to IRS limits). But if the vehicle is used for business and https://worldpaydayloans.com/payday-loans-ga/flowery-branch/ personal reasons, you can only deduct business use expenses.