AUTOMOBILES Leasing a new car is sometimes more expensive than buying one

One negative is that you never actually own the vehicle.
SALT LAKE TRIBUNE
When Bruce Heyborne of Salt Lake City started leasing vehicles 15 years ago, it was all about the lower monthly payments leasing allowed.
He also liked driving a new car every three years without ever having to worry about selling or trading his vehicles.
"When leasing first became popular, the residual value on the vehicles was so high, the lease cost was way less than you could buy for," he says.
A third of consumers lease new vehicles, according to the Consumer Federation of America in Washington.
Deals can be hard to resist. General Motors, for example, is advertising a 48-month lease for $222 per month on a 2004 Chevy Impala with no down payment, security deposit, first payment or money due at signing. Bear in mind, GM says, that each dealer sets its own price, and payments vary.
Downside
"It appears to be a less expensive way to own a car," CFA spokesman Jack Gillis says of leasing. The problem is, you never own the vehicle. It's not yours to trade, sell, customize or drive beyond the lease period. When you own, it's yours long after the last payment. That's one reason Heyborne bought instead of leased his 2003 Chevy Silverado diesel pickup -- that and the no-interest loan he was able to get on the vehicle.
"People think of leasing as just like having a rental car. [But] you're responsible for maintenance, you're responsible for upkeep, wear and tear on the car. It's really not just this great thing," says Gillis, who has studied leasing for a decade.
It costs more in the long run, he cautions.
"I'm not against the concept of leasing ... just understand you're going to pay more for that privilege."
For example, if you will be moving out of state during the lease period, state taxes may differ and can result in recalculated monthly payments. However, some states do allow credits for taxes already paid, says Tarry Shebesta, president of LeaseCompare.com, in an e-mail.
Leasing tips
The U.S. Federal Trade Commission offers the following leasing tips:
USpeak the language. In a closed-end lease, you return the car at the end of the lease and walk away, but you usually are responsible for end-of-lease charges such as wear and tear. Chocolate-milk stains on the back seat, dings and dents or a missing spare tire can add up. In an open-end lease, you pay the difference between the value stated in the contract and the lessor's appraised value when the lease expires, according to the FTC.
UCapitalized cost includes the purchase price, any bank fees such as an acquisition fee and sales tax if paid up-front, Shebesta says. Any money down is subtracted from the cost. Capitalized cost reduction is like a down payment on the lease, the FTC says. If you are trading in a vehicle as part of the lease, have the dealer apply the trade-in value to the price your lease is based on. Lease inception fees may include a down payment, security deposit, acquisition fee, first month's payment, taxes and title fees, the FTC says. Ask for a list of fees as a starting point for negotiation.
UAsk about any extra charges, such as penalties for getting out of a lease early or driving above the agreed-upon mileage. In the West, GM assesses 20 cents per mile over 48,000 miles on its 2004 Chevy Impala and some of its other leased vehicles, according to an advertisement on its Web site.
UThe manufacturer's warranty should cover the lease's entire term and the number of miles you are likely to drive. The FTC also recommends buying "gap insurance" to cover the difference between what you owe on the lease and what the car is worth if it is stolen or totaled. Shebesta says most leases include "payoff" gap insurance, which makes up part of the acquisition fee. This allows the consumer to walk away from the lease; "replacement" gap insurance replaces the vehicle with a similar one and the lease continues, he says.
UFederal law requires lessors to provide cost information before you sign the lease. The Federal Consumer Leasing Act Disclosures form, which asks the lessor to spell out all aspects of the agreement, can be found at www.ftc.gov. Do a search for "Look Before You Lease" and click on the embedded "attached form" link.
UReview the contract at home and be alert for any charges not already disclosed, such as preparation fees, the FTC advises.