Personal Leases (cars, household furnishings etc., )

Hi,
Leasing offers the consumer another financing option when obtaining cars, household goods, musical instruments etc., A lease is really nothing more than a rental agreement which, at the term of the lease, means you own nothing. Leases have advantages and disadvantages. The most important thing is to be aware of the total cost involved in leasing and comparing it to buying the same item. For example, many people prefer leasing cars compared to purchasing them due to a lower outlay of cash, and in most instances a lower monthly payment. Most car leases have a built in maintenance program that is factored into the cost of the lease. The downside of car leases is that you have a perpetual car payment you may avoid if you purchase the vehicle. Another lease people encounter is the furniture lease. This type of lease is beneficial when a person's situation dictates a short predetermined amount of time in which they will be staying someplace. Furniture leases are not to be confused with rent to own programs. Rent to own programs are generally three to four times more expensive than leases and should only be used in certain situations. About the only benefit of the rent to own programs is that you can walk away from your obligation at the end of each month and not owe any more money. This factor makes them suitable for people that are going to be staying somewhere for a short undetermined amount of time. Financing on leases is generally disguised in what is called a money factor. In most instances a money factor is nothing more than a financial calculation that charges people so much per thousand dollars over the term of the lease. When you obtain an auto lease, the leasing company is charging you on two different fronts. The first one is the depreciation of the car over the term of the lease and the second is that they are passing their cost of the money they have in the car onto you. As with all types of financial instruments, leasing alternatives should always be investigated prior to purchasing an item.
Tomorrow I'm going to talk about commercial leases.
Until then,
Alan