KANSAS CITY, Mo. - Auto experts say a brand new car can depreciate in value by up to 20 percent as soon as it's driven off the lot. That drop in value has lead many car buyers to instead look at leasing as an option.
Lease payments can sometime be cheaper than loan payments. Monthly lease payments can range from $160 to well over $1,000, depending on a vehicle's make and model. A typical lease lasts for 36 months, though some dealerships offer them for one to five years.
"When leasing a car it's just like buying a car," Angie's List founder Angie Hicks said. "You should be prepared and understand how much the car is really worth and go in ready to negotiate. Don't just think about the monthly payment. Also think about the residual value of the car, the price you would pay if you buy the car out of the lease because you might fall in love with the car and want to keep it."
Angie's List advises consumers to read and fully understand the lease agreement before signing. Additionally, remember that if you are leasing there are usually limitations on mileage.
Also, ask the dealership about gap insurance coverage. If you have it and the leased car is wrecked, the insurance will cover the difference between the car's actual market value and the remaining balance to pay the lease off.