The first time you lease a car, there can be charges, fees, and taxes that are unexpected. For example, All U.S. states, except New Hampshire, Alaska, and Oregon collect a sales tax on motor vehicle purchases. When you lease a car, the leasing finance company passes the sales tax to you. Generally, the most common method is to tax monthly lease payments at the local sales tax rate. This means you only pay tax on the part of the car you lease, not the entire value of the car. That sounds good, right? Not when you realize that you’re paying tax on the finance charges.
Another problem is the mileage. Read your contract carefully. Leasing agreements specify the maximum average annual mileage you’re allowed without paying a penalty. The most common mileage limit is 15,000 miles per year. If you exceed it, the penalty at lease end can be costly. If you think you will drive more than that, you can buy extra miles. But what if you have unused miles left at the end of your lease that you paid for? You don’t get a refund unless it is in your lease agreement. This is becoming a big issue, and there are already lawsuits pending. If this has happened to you, Shpoonkle can connect you to an attorney.
Ask what your interest rate is. The lease agreement will show the total amount of interest you are being charged, but not the rate.
Know the difference between closed end leases and open end leases. In closed end leases, when the lease is over you turn in your car and walk away. If the value of the car has depreciated more than the leasing company had anticipated, it’s their problem, not yours. In an open end lease, it’s your problem.
When you turn in your car, the leasing company can charge you for repairs, on what they consider more than normal wear and tear. They can charge you what you may consider excessive fees. Since you no longer have the car, you have no option to see the damage, or getting it taken care of at a lower price. If you think you are being taken advantage of this way, Shpoonkle can help connect you to a qualified attorney.
If you have an accident with a leased car and the car is totaled, your insurance company will have to pay the cost of the car. However, the financing bank may sue you for breach of contract if there is a clause in your lease contract that says that you are responsible for the interest the bank would have earned regardless of when or why the lease terminated.
Think Shpoonkle if you have leasing problems.