Auto leasing revs up again

Auto leasing is getting a new lease on life.

Since falling out of favor in the early years of the decade, leasing has been making a steady comeback with people like Debbie Rubio of Boyle Heights.

Rubio, co-owner of a Long Beach public relations firm, leased a 2007 Ford Edge crossover last month. The decision to lease rather than buy, she says, was a no-brainer.

"It's the easiest thing," said Rubio, 52.

"You go in and you put down a thousand bucks and you're out of there."

It didn't hurt that, after the down payment, the monthly cost of the three-year lease was $380. She figures the monthly payment on a straight purchase deal would've been more than $500.

"And after three years, all I have to do is take it back," she said. "I don't have to worry about trying to sell it or what kind of trade-in I'll get."

Leasing isn't for everyone, of course. For instance, if you plan to drive your car for more than three years, buying is probably the way to go. Buying also makes sense if you spend a lot of time on the road. Leases typically come with limits of 12,000 to 15,000 miles a year; the 10- or 12-cent-a-mile charge above the limit can add up fast if you miscalculate.

There are other advantages to buying. By building equity in the car, you have some trade-in value when you buy a new vehicle.

And once the loan is paid off, you can enjoy the pleasant sensation of not having to write a monthly check.

But there are solid reasons to lease, experts say, especially over the short term. Unlike a house — until recently, anyway — a car is a depreciating asset. That means that unless it's a Ferrari Enzo or some other collector classic, it tends to lose value year after year.

When you lease, you pay only for the portion of the car that you use. That generally means lower monthly payments, as in Rubio's case, or a fancier car for the same monthly payment as a not-so-fancy car.

"Often a lease allows someone to get a more expensive car than their budget would allow if they were buying," said Alex Rosten of Edmunds.com, an online automotive research site. Indeed, the 10 vehicles with the highest percentage of lease transactions are all luxury models.

Leasing can also provide tax benefits if the vehicle, like Rubio's, is used for business. And if you're the type who wants a new car every three years or so, leasing is definitely worth looking into.

And if you want to play the stock market, you could lease a car that you could afford to buy outright and invest the difference, said Brent Kessel, chief executive of Kubera Portfolios.com, a Pacific Palisades-based investment management firm.

For many, leasing carries a whiff of financial skulduggery — earned back when deceptive practices were common in the industry.

"Most people think that leasing isn't a good deal, and that's usually because they've gotten a bad deal on a lease in the past," said Ken Potter, vice president of sales for CarsDirect.com, an online automotive site.

Federal disclosure rules adopted in the late 1990s have leveled the playing field considerably, experts say.

You still have to pay attention, though. There are a slew of websites offering information to car buyers on dealer costs, incentives, options and so on. Detailed information on leasing deals is harder to come by, making comparison shopping more difficult, although sites such as Edmunds.com provide lease calculators that can help you prepare before going to a dealer.

At the very least, Potter said, potential leasers should remember that they still need to get a good price on the car.

source : www.latimes.com