Cars for kids: 1-year leases gain traction
Should you lease a car for your high school student instead of buying a clunker?
More parents are doing just that, according to a nationwide leasing business. The number of one-year leases for high school seniors is up 17 percent from a year ago, says LeaseTrader.com, a short-term leasing marketplace.
The reason: Demand for leased cars shot up this year after Japan's earthquake and tsunami shrank the number of new cars available, making used cars pricier and harder to find.
A look at one-year leases:
HOW THEY WORK
Rather than enter a new full-term lease, parents typically take over the remaining 12 to 14 months of an existing lease.
PROS
— No long-term commitment on car payments.
— Most vehicles are only one to two years old, with excellent safety records.
— No down payment.
— Lease contract expires around same time son or daughter heads off to college.
CONS
— No car after a year.
— Insurance costs are higher for newer cars. And leasing companies often require additional insurance to cover their losses if the car is damaged.
— Mileage limits restrictions result in extra charges if you exceed the remaining allotted miles outlined in the lease terms, which typically run from 8,000 to 14,000 miles.
— Upkeep costs could be higher than on a car you own, because this is the bank's vehicle and you will be held to certain standards for regular maintenance.
WHAT'S POPULAR
The Mazda 3, Toyota Yaris and Mini Cooper are among the popular models being leased to students for the year before they head off to college. Average prices recently ranged from $185 a month to roughly $235 a month on LeaseTrader.
This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader.com