Car Leasing 301 - Initial Car Lease Costs Cont...
Sales Taxes, Title and License Fees
In most states and provinces, when buying a car with a loan or cash, sales tax must be paid in full on the entire value of the vehicle at the time of purchase. Leasing a vehicle, most provinces and states allow taxes to be fixed on each monthly payment rather than on the entire value of the vehicle. The rationale behind this is to tax you only as you consume the vehicle's value.
Tags, title and license fees are the responsibility of the lessee (define: lessee) just as they are with a loan. These fees can be paid up front, or included and amortized over the life of the lease.
Insurance
A consumer must be provided all insurance requirements and information by the leasing company when entering into a lessor (define: lessor) contract. Either the leasing company can provide the insurance or the consumer can provide their own insurance through their existing insurance carrier. Since leasing may require higher limits for insurance coverage than what the consumer may presently carry, the consumer should be informed in the lease agreement of the type and amount of insurance required.
Should you have an accident and the car is declared a total loss, or the vehicle is stolen and not recovered, GAP insurance will cover the difference (the gap) between what is owed on the lease contract and the amount that the primary insurer will cover. This is most important in the early years of a lease, when the difference between the two amounts is greatest
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