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Think twice before heading to the airport with that huge wad of cash | Crime-and-courts

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When he heads to airports now, Samuel Haile thinks of that day at Buffalo’s airport a few years ago. The government took $12,000 from his carry-on and wouldn’t give it back.

Haile was not charged with a crime, but he had to prove his cash was not a windfall from a drug sale or wasn’t about to be spent on illegal drugs.

“I was angry,” Haile said. “But there was really nothing I could do.”

Dozens of passengers have suffered such a loss in recent years in Buffalo. With an X-ray machine, a screener spots a dense mass in a piece of luggage. If it’s an unusually large sum of cash, the government takes it on the suspicion that it’s drug money. 

At Buffalo Niagara International and every other airport in the country, the Transportation Security Administration screens bags and people in the name of airline safety, not because police have probable cause to think a crime is underway.

Still, those searches enrich law enforcement.



TSA officer inspects baggage at Buffalo Niagara International Airport

A Transportation Security Administration officer inspects a traveler’s bag at a checkpoint at the Buffalo Niagara International Airport in Cheektowaga.




In Buffalo, according to internal reports obtained by The Buffalo News, airport police and federal agents seized more than $860,000 over four years – more than $17,000 a month, on average – without charging the traveler with a crime. In fact, the dozens of travelers relieved of their money were sent on their way.

In this age of credit cards and debit cards, most people need not carry large sums. Yet some people do, and no law prohibits flying within the United States with any amount of cash. Those travelers explained they were off to buy cars, legally gamble or relocate to new homes. But to agents and officers at the airport, many stories did not pass muster. The bills were dropped into evidence bags.

TSA screeners can only seize objects that might imperil an airliner, and cash does not pose such a threat. Yet the screeners set the wheels in motion. The documents obtained by The News through the Freedom of Information Law show that after spotting amounts as small as $6,000, screeners turned to supervisors, who turned to Niagara Frontier Transit Authority police. The police called in their federal partners in a joint task force, usually the DEA or the FBI.

Typically, someone asked if the traveler minded being driven over to the police station on Aero Drive for a few questions. Inside, a video camera was clicked on, and the traveler was asked to elaborate about occupation and income. Any hesitation or inconsistency was noted.

A drug-sniffing dog was led in. Most paper currency in the United States has come into contact with drugs, research has shown. The dog, in cases reviewed by The News, consistently confirmed the scent of narcotics. That gave the officials the final measure of probable cause needed to keep the cash. In a few weeks, the traveler received mailed instructions on how to appeal for the money’s return.

Because the NFTA police worked with federal agencies, the money was seized under the federal asset-forfeiture system. Under this route, the police agency is eligible to keep up to 80%, depending on how much work was involved. That’s a larger share than it would keep under New York’s law. Further, with the federal system, the police need not make an arrest.

NFTA Police Chief George Gast

NFTA Police Chief George Gast.




George Gast is chief of the NFTA police, a former FBI agent who occasionally worked undercover and supervised agents targeting organized crime and the drug trade. He says the money seized from travelers has gone to buy weapons, vehicles, Narcan and to finance many other law enforcement purposes.

Not all the travelers who are spotted with large sums of money have it taken, Gast says, “not by a long shot.”

“Am I confident we always get it right? Nobody’s 100%,” he said when asked if he believes his officers and federal agents are always correct in assuming a traveler had illegal motives when they seized money.

“But just because money is seized, doesn’t mean it is forfeited,” he said. “Whenever the money is seized, the person that money comes from has an opportunity to appeal that seizure.”

When the travelers went to court to get their money back, Richard D. Kaufman was often the government official working against them. Before he retired in June, Kaufman was an assistant U.S. attorney and an expert in the forfeiture law. He would gather facts in an attempt to show the money was gained illegally or the traveler intended to use it for illegal purposes.

When asked why many travelers who go to court to get their money back end up compromising and letting the government keep a portion, Kaufman acknowledged the expense of fighting back.

Travelers see the futility of paying a lawyer, say, $20,000 to recover $10,000, he said. Lawyers, Kaufman said, will advise clients to “cut your losses.”



Buffalo Niagara International Airport

Travelers walk to the Transportation Security Administration checkpoint at the Buffalo Niagara International Airport




The law

Haile, of Rochester, and countless travelers across the country became poorer because of Title 21, U.S. Code, section 881 (a)(6). It lets federal authorities take “all moneys, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance or listed chemical …”

Sometimes, the authorities in Buffalo had good reason to be suspicious about money they saw. In January 2017, for example, the police and agents kept $9,928 found in luggage along with a marijuana grinder, gummi bears made of marijuana and instructions on how to grow marijuana. The traveler admitted he had grown marijuana in the past, records say.

Months later, NFTA police and the DEA took $64,000 from three people who said they were traveling to Houston for a birthday party. The officers and agents felt they were given vague answers as to how they came by the cash. Three days later, the NFTA police learned from officers in Houston that one of the travelers had just been arrested with a kilo of cocaine.

The News found two other cases where travelers who had their cash taken were later charged in large-scale drug investigations.

Haile and many others were different.

“I was a party promoter, and I dealt with a lot of cash,” he told The News.

An interrogation

In June 2016, Haile went to the Buffalo airport for a flight to Houston to visit friends. He and the friends were to drive to New Orleans for a festival, and Haile was eventually to fly to California to visit other friends. He explained to the officials that he carried the $12,000 because he had bad credit and his bank withdrawals were limited.

He told them he earned the money in three ways: He owned three taxis. He had started a small home improvement store. He owned “Train to Go Entertainment,” a party promotion business.

The money included 515 $20 bills.

The prosecutors found $20 bills suspicious. “Small denominations are more commonly used than other denominations in street-level drug trafficking,” they said in court papers.

Small denominations are used to pay taxi drivers, too, Haile countered, and to get into special parties and events, he said. As his case headed to court, Haile filed papers that included a flyer from an event he promoted: A ticket cost $20.

His father, a registered nurse in Rochester, wrote a letter to the federal judge. “I assure you that money was not collected by selling drugs,” he said. “I will never allow my son to be a drug dealer.”

But prosecutors also cited a minor conviction in his son’s past, attempted drug possession. The case had been disposed of with a conditional discharge three years earlier.

Inside the NFTA police station on Aero Drive, Haile watched as his money was placed in a cardboard box and one of the NFTA’s drug-sniffing dogs was brought in.

Richard D. Kaufman, a retired assistant U.S. attorney in Buffalo, explains civil forfeiture law and the government’s position.

Research led by a scientist at the University of Massachusetts in Dartmouth found a decade ago that up to 90% of U.S. paper currency contains traces of cocaine. Researchers have also found traces of heroin in as much of 70% of bills and lesser percentages of codeine, amphetamines and methamphetamines.

Kaufman, the now retired federal prosecutor, acknowledges those findings but relies on a court-tested study in Miami that showed dogs are not hitting on traces of contamination but on the scent of drugs, and the scent can dissipate in 48 to 72 hours unless the bills have been wrapped in say, cellophane, or materials that trap odors. To him, the Miami study proves a dog’s hit confirms the currency has been in recent contact with drugs.

Researchers have also found, however, that handlers can affect a dog’s findings. At the University of California at Davis in 2011, 18 police handlers were asked to lead their dogs through controlled searches for drugs, and they were told some hiding places were marked by a piece of red paper. Handlers weren’t told that no search area contained drugs. In the vast majority of searches, the dogs hit on a drug scent when they shouldn’t have. To the researchers, it indicated that a handler’s expectations can sway the outcome.

Gast said the dog is the final investigative technique used to establish the money is connected to the drug trade.

That was indeed true in Haile’s case. He watched as an NFTA dog scratched the box containing his money.

“The suspect was then advised that his currency was being seized,” the NFTA’s report says.



John Roneker

Law enforcement officers seized $36,000 from John Roneker, of Buffalo, at Buffalo Niagara International Airport in 2015, although he was not charged with a crime. He said he planned to use the money to buy a car in Oregon. 



Sharon Cantillon



$36,000 seized

Kaufman said authorities suspect that some travelers are taking large sums of money to three states where recreational marijuana is legal – California, Washington and Oregon – to buy large quantities and drive it back.

John E. Roneker, of Buffalo, was traveling to Oregon in February 2015 when he had $36,000 seized. But Roneker was flying a few months before the state completed its system legalizing marijuana.

Roneker said he didn’t try to conceal the money. He had read online advice telling him to notify the TSA screener that he was carrying a large amount of currency, so he did.

Roneker said he travels to car auctions or private sales to buy cars to resell. Sellers balk at personal checks, he said, and he has found that even cashier’s checks are looked at warily when presented by an out-of-towner. Cash makes sellers more comfortable and, he said, helps him bargain.

“Having cash gives you leverage,” he said.

Roneker showed the screener a business certificate for his company, Nickel City Wholesale Auto of Buffalo, and paperwork for the car, or cars, he had his eye on.

He was soon driven to NFTA police headquarters.

A DEA task force agent began making calls. People at the businesses in the Portland area that Roneker had dealings with didn’t back up every detail he had offered to the TSA or the police. For example, Gilbert Enterprises Auto Auction, near Grimsby, Ore., had no auctions scheduled for the day Roneker said he would be there. And it didn’t have a 1967 Barracuda, one of the cars Roneker said he intended to buy.

Roneker later responded in court papers that he never said he was going to a Gilbert auction and never said Gilbert had the Barracuda.

The DEA agent found Roneker had a criminal record and pulled out a marijuana-related arrest from 1989, when Roneker was 17 years old. In 1991, he was charged with resisting arrest and pleaded guilty to disorderly conduct, a violation. In January 2000 he was charged with assault but, the DEA found, the charge was dismissed a month later. In July 2014, he paid a $100 fine after admitting to a violation for possessing a personal amount of marijuana.

The vast majority of Roneker’s cash was in $20 bills – “characteristic of currency received by drug distributors from their customers,” the authorities wrote in court papers.

At police headquarters, an NFTA officer brought in Deuce, a dog “capable of detecting the odors of marijuana, cocaine, methamphetamines and their derivatives,” court papers said. When Deuce was done, the police told Roneker he could fly to Oregon but his money could not.

“They put me through hell for no reason,” Roneker said. “You were assumed guilty and you had to prove you were innocent.”



TSA-Buffalo-Niagara-International-Airport-Mulville

Travelers go through the TSA security checkpoint at the Buffalo Niagara International Airport.



Mark Mulville



The authorities found no criminal record to use against Daniel A. Sherer. Regardless, they took his $49,900. Most of it, $45,000, was held in two document-sized envelopes in his carry-on bag in 2015. The rest was in a fishing boot in his checked bag.

Sherer told police the $45,000 came from an insurance settlement after fire destroyed his fishing boat 10 years earlier, in Dana Point, Calif. At the time, Sherer explained, he was dealing with alcoholism and gambling issues, so he gave the settlement money to a friend for safekeeping. A decade later, Sherer and the friend had a falling out, and he flew to Buffalo to retrieve the money. The friend, a Cheektowaga resident, met him at a Dunkin Donuts near the airport and handed it over, Sherer explained to authorities.

The NFTA police and an FBI agent figured the money was drug proceeds because some of the bills had been printed after 2004 or 2005, when Sherer asked the friend to hold the money. Most of the bills were twenties, “significant in that law enforcement believes that the $20 bills are often an indicator of drug traffickers,” the authorities said in court papers. Further, a specially trained dog had found that “controlled substances had recently been in contact with the currency.”

Cash is the defendant

Travelers who have their cash taken can file a “petition,” asking the federal agency involved in taking the money to return it. Travelers also can take their case to federal court.

They are asking that their money be pardoned because in the eyes of the federal government, the cash is the defendant. For example, Sherer’s one case was titled “United States of America v. $49,900 in United States currency.” The lawyers call the money “the defendant currency.”

Money lacks the same rights as a person. To convict a person of a crime, prosecutors must prove their case “beyond a reasonable doubt,” the highest legal standard. To forfeit money or property, prosecutors can win with a “preponderance of the evidence,” the lowest standard. They need to show only that it’s more likely than not that the cash was obtained illegally or will be spent for illegal purposes.

It’s also more likely than not the government will keep the seized money no matter how the traveler fights back. In March 2017, the Justice Department’s Office of Inspector General reported that over 10 years, the DEA returned money 8% of the time. Part of the reason might lie in the fact that not everyone tries to get the money back. Claims or petitions were filed in just 20% of the DEA’s total seizures. Of those 20%, cash was returned in roughly four out of 10 cases.

“It’s very difficult to get the money once the seizure happens,” said Paul Avelar, a senior attorney at the Institute for Justice, a nonprofit law firm devoted to, among other things, helping people recover their money. “You have to prove your own innocence. And if you can’t prove your own innocence, you lose your money.”

In its research, the Institute for Justice has found that “civil forfeiture,” which allows the government to take property without proving a crime, has become far more common than criminal forfeiture. In one of its reports on the topic, called “Policing for Profit,” the institute says “civil forfeiture laws pose some of the greatest threats to property rights in the nation today.”

The NFTA police, for example, got to keep around $1.2 million that was seized from 2012-2016 without having to make an arrest, both at the airport and in work in and around Buffalo, according to Justice Department statistics analyzed by the Institute for Justice. By contrast, the NFTA’s share of money from criminal forfeiture – after a conviction – amounted to about $23,000 over those years.



August Terrence Rolin

August Terrence Rolin and his daughter Rebecca Brown filed a class-action lawsuit in January, months after the Drug Enforcement Agency seized $82,373 from Brown at the Pittsburgh airport. Brown says she was attempting to fly with her father’s life savings to Boston, where she planned to open a bank account for him. 




Retirement money seized

In January, the institute filed a class-action lawsuit against the TSA and the DEA on behalf of August Terrence Rolin of Pittsburgh and his daughter, Rebecca Brown of Boston. Brown had $82,373 seized from her at the Pittsburgh airport in August of last year. Neither was charged with a crime.

The lawsuit lays out this account: Rolin, a retired railroad engineer, felt more comfortable keeping his cash in his home. But as he moved from his house to an apartment, he asked his daughter, to whom he had given power of attorney, to place his cash in a checking account for him. The request came near the tail end of his daughter’s visit. She figured she would open the account when she returned to Boston, and from there she would pay most of her father’s bills. She took the cash with her.

Rebecca Brown checked online and found it’s legal to carry any sum of money on a domestic flight, according to the Institute for Justice. But when the money showed up on an X-ray, the Pennsylvania State Police and then a DEA agent questioned her. The DEA agent took the $82,373. Then in early March, seven months after the money was taken and after a blizzard of publicity, the DEA relented. Brown and her father got the money back. The Institute for Justice is still pursing the class-action case.

Giving up

Not every traveler enlists a lawyer, or lawyers, to recover their money.

“I could not afford the lawyer,” said Maxie S. Cohen of Rochester, who had an attorney file court papers for him but later surrendered most of the $70,100 taken at the Buffalo airport in November 2018.

Cohen was flying with his friend Susan Fisher to Los Angeles. Fisher, who had been carrying the money in her suitcase, refused to answer the officers’ questions that day. But Cohen told The News she was thinking of relocating to California and investing in a restaurant there. In court papers, prosecutors never disputed Cohen’s explanation that the money had come from lottery winnings, and he had paid tax on it.

But years earlier he had sent $8,000 in cash to California for a Jaguar and didn’t contest that seizure after a police dog alerted handlers to the scent of drugs inside the package, the government said in court papers. (Cohen told The News he was acting as an intermediary for a friend, and it was up to the friend to recover the money.)

Because an NFTA dog in 2018 identified traces of narcotics on the currency seized at Buffalo’s airport, the government said a preponderance of the evidence showed the money was to be spent buying drugs.

Months later, Cohen agreed the government could keep $42,060. He got back $28,040.

Similarly, Haile agreed to give up a portion of his $12,000 – a little over $5,000. The rest was for him, but he didn’t see it again. The balance went to pay overdue state and federal income taxes. He said he also gave up on his trip to Houston, New Orleans and California. With his money seized, he could no longer afford to go.

Daniel Sherer, who had almost $50,000 seized, got back $20,000. The government kept the rest.

As for Buffalo’s Roneker, he was given back $20,000 of the $36,430 seized at the airport but had to use his share to pay late city and county taxes, a water bill and to pay off a judgment against him held by the Riverside Federal Credit Union.

Roneker’s financial situation was already under stress. He had lost a house in Niagara County before moving to Buffalo. Not long after the government kept more than $16,000, he filed for bankruptcy.

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Red-hot market: Tips for first-time homebuyers 

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With Long Island’s housing market sizzling hot, the process of buying a new home can seem like a daunting one. It doesn’t have to be.

To help first-time homebuyers chart the waters of buying in this market, Newsday Live hosted a question-and-answer session Tuesday with local housing experts as part of its web series “Hot Tips for a Hot Market.”

The virtual session, moderated by Newsday anchor Faith Jesse and residential real estate reporter Maura McDermott, included Tricia Gleaton, vice president of the Homeownership Center at the Community Development Corp. of Long Island, and Quentin Hardy, branch leader with Movement Mortgage in Huntington.

Responses have been edited for length and clarity.

Where should buyers get started? And what first steps should they take?

Gleaton: For somebody who’s looking to buy a home for the first time, a great place to start is by seeking out homebuyer education and counseling. A lot of people aren’t aware they exist. And part of that process will be to help establish a budget, understand what’s affordable and what’s going to be [financially] comfortable long term … and then getting access to loan programs, down payment assistance and closing costs, and grants that are out there that may be leveraged in the home purchase.

Many first-time homebuyers don’t have the standard 20% down payment. What tip can you give them on saving up? And what options do buyers who don’t have 20% to buy their first home have?

Hardy: There are lots of options. I think the phrase “the standard 20%,” that’s not the standard. It’s sort of a myth and a belief that’s been propagated but I bought my first home back in the late 1990s with 3% down. Fannie Mae, Freddie Mac, FHA … there are lots of 3%, 3.5% down payment programs so you do not need 20% as a first-time homebuyer. There are lots of low down payment options buyers should look into. I know for my first home, we had to sacrifice. I lived at my parents’ house as an adult, married with a child because that’s what we needed to do to save up to buy our first home.

Gleaton: Many lenders offer down payment and closing cost assistance as well as state [and municipal] grants. There are programs available where someone can rent with the plan that they’re moving forward with the purchase of the home. And there are unique programs. One of the programs CDC of Long Island offers may help [people who are] Housing Choice Voucher holders, commonly known as Section 8.

A lot of people have blemishes on their credit report. So what can people do if they have bad credit, but they still want to get a home?

Hardy: I think where we have to start is with that word bad. How bad is bad? You can have credit that’s so poor that you cannot get a home loan. But there are banks that will do loans at 580. There are situations where you can get loans as a first-time homebuyer even if you have bad credit. It can be low enough that you’ve got to work on the credit first, though it would probably be a great start to have a conversation with a professional about how bad bad is.

The market is hot right now. Should buyers try to wait it out in hopes that it’ll cool down?

Gleaton: It is a very competitive market right now but that hasn’t necessarily dampened people’s desires to become first-time homeowners. One of the things that we tell people is you don’t have to rush … it doesn’t necessarily mean you don’t want to continue your search. Continue to save, continue to work toward your purchase, but be patient recognizing that you want to make an informed decision that’s not emotional. Be careful with bidding wars. Take your time to do your search and research in a methodical way. Be patient. The right home is out there for you.

Hardy: The general rule is it’s not the timing of the market, it’s time in the market … so that now is a good time to buy.

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Car Leasing Guide: Everything You Need to Know

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Car Leasing Guide

At first blush, car leasing seems like a grand idea. After all, you can get more car for the same monthly financing payment. Who wouldn’t want that? Well, there’s a lot more to weigh between financing and leasing than simply getting more car for your buck. Although, that is the primary reason people lease.

Numbered among the other reasons people lease is the thrill of that new car smell. Some folks simply like the idea of driving a new car every two or three years. Leasing also streamlines writing off your vehicle as a business expense at tax time.

Another reason to lease is that sometimes the carmakers offer really sweet leasing deals that aren’t available to those financing a car purchase. Repeat leasers also always have a car that’s usually under a factory warranty. And finally, when the lease expires, you don’t have to negotiate a trade-in value or go through the selling process. You just hand over the keys and walk away. Easy peasy, right? Well, usually. Read on.

What is a Car Lease?

A car lease is basically a long-term rental for a contracted number of months. Unlike financing a car purchase based on you eventually owning the car, leasing is like a long-term rental. You are still locked into the deal for a contracted number of months and a monthly payment.

However, instead of paying down a loan and building equity, you are paying for the car’s estimated lost value (depreciation) during the term (length) of the lease. You are paying for that and the interest on the money borrowed to underwrite the lease.

What Do You Need to Know Before Leasing?

Arguably the key concern when considering car leasing is, on average, how many miles you drive yearly. According to the United States Department of Transportation, most Americans drive a total of 13,476 miles per year.

Signing a lease binds you contractually not to exceed an established mileage limit. That limit, or mileage cap, is averaged out over the number of years in the agreement.

Depending on the lease, agreements range from 10,000 miles per year to as many as 15,000 miles per year. Whatever the limit might be, the leasing company will penalize you for every mile above the limit. Generally, that penalty can be between $0.12 to $0.30 per excess mile. At $0.30, that works out to $300 for every 1,000 miles over the limit. It can add up.

Can I Negotiate the Price of a Leased Car?

Yes. As with a financing deal, you can save yourself money by negotiating down the car’s selling price you are going to lease.

What is the Money Factor in Leasing?

When you finance a car, you must also pay for the money you are borrowing. What you pay is called interest, and it’s displayed as a percentage (2.5%, 3.0%, and so forth). You need to know the rate of interest you will be paying. The higher the interest rate, the higher your monthly payment.

When you lease, you must also pay for the money the lessor used to buy the car. In leasing, however, the interest is called the money factor. It’s calculated and displayed differently (0.0010, 0.0023, and so forth). How in the world do you know what the interest rate is on a lease, right?

To translate the money factor into a form more easily understood, just multiply it by 2,400. So, 0.0023 x 2,400 = 5.5%. We know: Why don’t they just say that?

Who is Responsible for Maintaining a Leased Car?

The leasing company expects you to maintain your leased car carefully. That means following the maintenance schedule outlined in the owner’s manual. The good news is, many new vehicles come with some sort of free maintenance plan.

At the end of the leasing period, an agent of the leasing company will inspect the vehicle for any damage beyond “normal” wear and tear. Determining what is normal is entirely up to the inspector. If the inspector decides any damage is beyond normal wear and tear, you will be charged for it.

Who is Responsible for Insuring a Leased Car?

You are responsible for insuring your leased car. The leasing company dictates the amount of coverage you must have for the vehicle. Determine what those amounts will be and contact your automobile insurance agent to establish the annual premium before you lease.

What if I Want Out of My Lease Early?

It bears repeating: A car lease is a binding contract. The leasing company sets the monthly payments based on the length of the lease established in the agreement. If for some reason — any reason — you want or need to bail on the lease early, there will be a penalty for doing so.

At worst, that penalty may require a balloon payment to cover the remaining outstanding payments. You can’t just return the leased car or sell it to pay off the leasing company. It’s not your car, and you have no equity in it.

Market conditions these days make it possible to negotiate with a dealership if you’re planning to buy a car. Or, because the used car supply is tight, dealerships may be more willing to make a deal to get you out of your lease early.

Brokers with auto lease transfer companies like swapalease.com can also attempt to connect you with a deal that lets you sign over the lease to someone else.

Before you make any choices, weigh all your options to determine the best option for you.

How Does My Credit Affect Car Leasing?

Credit score information for leasing

As with financing a car purchase, a leasing company will use your credit score and history to determine whether or not it will lease to you. Roughly 83% of new car leasing during the first three months of 2021 was to borrowers with a credit score above 660. This is according to the national credit bureau Experian. It also found that the average credit score for leasing during that period was 734.

If your credit score is 501 to 660, you may be able to find a lender willing to lease to you, but expect to put down a hefty down payment. Also, you can expect to be tagged with a higher-than-average interest rate.

It has always been true that leasing generally requires better credit than financing. When leasing, you have little or no skin in the game. All you stand to lose if you stop making your lease payments is whatever down payment you made.

You don’t now and never will have any equity in a leased vehicle. You are really renting it, remember? Leasing companies know you have little to lose. Consequently, they tend to be pickier when evaluating lessees rather than buyers.

RELATED STORY: Can I Buy a Car with Poor Credit History?

Car Leasing vs. Buying

Whether you lease or buy and finance your next car, you will be obligated to make a monthly payment. In most cases, both will also require some amount of money upfront. When financing, it’s usually a down payment of some sort.

With leasing, you may have to put up a security deposit, the first month’s lease payment, a fee for arranging the lease (acquisition fee), a down payment, or some combination of those. In either case, there are also car title and registration fees.

Pros of Leasing

Because you are only paying for the estimated depreciation while driving the car and not the entire purchase price, monthly leasing payments tend to be lower than financing payments. It simply means your money will go farther leasing a car than financing one. A lower monthly payment is the top reason people give for leasing. It isn’t the best reason, but it is the most common.

Another perk of leasing is the freedom to drive a new car every two or three years with no strings attached. A side benefit of having a new car every few years is, you probably will always have a vehicle protected by the factory new car warranty. There may even be a free maintenance warranty for a portion, if not all, of the lease. And, every couple of years, you can have a car with the most up-to-date technological advances.

At lease end, you don’t need to worry about the hassle of selling the car or negotiating its value as a trade-in. You drop the keys on the lessor’s desk and walk away.

Leasing is better geared to writing off the cost of driving on your taxes if you can deduct business expenses.

Here’s some excellent news: If you still like the car at the end of the lease, you can buy it. Because the leasing company estimated what the car would be worth at the end of the lease (the residual value or residual), they may have guessed wrong.

If they underestimated the car’s worth at the end of the lease, you could cash in by buying that car for less than the current market value. It’s the smart thing to do in a tight market when supply struggles to meet demand.

RELATED STORY: How to Profit from an Off-lease Car

Cons of Leasing

Yes, the idea of driving a new car every few years with the benefit of always being under warranty is tempting, as is that lower monthly payment. Sadly, though, it means you will never build any equity. What you pay for with a lease is the depreciation. A car will lose roughly 35% to 40% of its value in the first three years. At the end of the lease, you won’t have a thing to show for those two or three years of payments.

Typically consumers sign a closed-end lease. There are also open-end leases. The difference is discussed in What Are the Types of Leases? in the section below. Closed-end is the type of lease covered here.

Driving a leased car is like counting calories to lose weight — every mile driven counts. Every lease comes with a mileage limit. It may average out as low as 10,000 miles per year, although 12,000 miles is more likely. You may be able to find a lease with a yearly cap of 15,000 miles. There are even some more expensive high-mileage leases on the market.

You’ll pay more per month but may avoid getting slapped with a mileage penalty at the end of the lease. That penalty is usually about $0.25 per excess mile. If you do a lot of driving, that can really add up.

The leasing company will hold you accountable for anything beyond its definition of normal wear and tear. You will be on the hook for any repairs the lessor deems over and above normal. Suddenly, with the excess mileage fee and damage fee, returning that leased car isn’t the easy-peasy experience expected.

Leasing is also like joining a street gang. Once you’re in, you’re in. Suppose some change in your life creates the need to get out of the lease early? Good luck. You may find yourself faced with owing a balloon payment equal to the outstanding payments on the lease. At the very least, you will have to pay some sort of stiff penalty. There are online companies like swapalease.com, brokering deals between people who want out of a lease and people willing to pick up a lease. But, such brokered deals will cost you, too.

Pros of Buying

The top advantage to buying versus leasing is that the vehicle is yours when the loan is paid off in five or six years. There will be the value you can cash in by selling or trading it in as a down payment on another car. It’s an asset. Of course, you can always decide to drive it until the wheels fall off. No payments for another five years or more is a pretty good perk. Especially when you consider by year four, the repeat lessee is paying for the depreciation on a second new car and still gaining zero equity.

Getting out from under your car loan is much easier than breaking a lease. As long as the lienholder is paid off, you can sell or trade in your car at any time.

Cons of Buying

Particularly if your credit is a bit sketchy, you may want to put down a larger down payment of around 20% if you want better odds of getting approved. That would be $5,000 on a $25,000 car. Leasing would allow you to keep at least some of that up-front cash.

Depending on the length of the loan, depreciation, and the way interest is calculated, you may owe more than the vehicle is worth until the last year or so of the loan. By that time, the car warranty may well have expired, too. Not only do you have to continue making payments on a 5- or 6-year-old car, but you may have to pay for any repairs out of your own pocket.

The Differences of Leasing a Car vs. Buying a Car

You can draw some fairly strong contrasts between leasing and financing. Both have advantages and disadvantages. Short term, a lease will cost less. In the long run, however, two leases will cost more than buying one car. And, at the end of five or six years, the loan will be paid off, and whatever value the car retains will be yours.

Here are some other stark differences.

Leasing

  1. Monthly payments: Leasing payments are almost always lower than financing payments on the same vehicle.
  2. Early Termination: You will pay a hefty fee if you want to end a lease early.
  3. End of term: Although you may owe some penalties, you can just hand the car back to the lessor at the end of the lease.
  4. Mileage: A lease restricts the annual mileage. Exceeding that mileage will cost you big.
  5. After-market: A leased vehicle is not yours to do with as you wish. Any alteration will cost you.
  6. Taxes: Leasing a vehicle allows you to write off the monthly payments as a business expense if you’re eligible.
  7. Warranty: Most leased vehicles come with a warranty that will likely cover your car for the duration of the leasing period, saving you money should something happen to it.

Buying

  1. Monthly payments: For the same vehicle, financing payments will almost always be more than leasing.
  2. Early Termination: You can sell or trade in a financed vehicle at any time, as long as you satisfy the loan balance.
  3. End of term: When the loan is paid off, the car is yours to keep, sell, or trade in.
  4. Mileage: There are no mileage limits with a financed car.
  5. After-market: Financing a car allows you to make it yours. Take care not to void the warranty. Otherwise, customize it to your heart’s content.
  6. Credit: If you have bad credit, you will most likely have to put down a bigger down payment to get approved.

What Are the Types of Leases?

Leases aren’t one size fits all. The leasing concept doesn’t vary, but the contract details do.

What is a Closed-End Lease?

A closed-end lease is the most common form of leasing. Sometimes called a “walk-away” lease, it sets firm terms, allowing the lessee to walk away at the end of the lease. All variables like the length of the lease, monthly payments, and the mileage cap are established in the leasing contract. As long as the contract terms get met, the lessee can just drop off the car at the end of the lease. The lessee also has an option to buy the vehicle at a pre-determined value.

What is an Open-End Lease?

An open-end lease is a bigger gamble for the lessee, who is accepting more of the risk. Typically that lessee is a commercial enterprise or business. The leasing company still sets a residual value and the monthly payments. Luckily, open-ended leases usually have more flexible mileage options than their closed-ended lease counterparts. However, unlike a closed-end lease, it’s the lessee taking the hit if the residual value at the end of the lease is less than the vehicle’s actual market value. The lessee must pay the difference.

What is a Single-Pay Lease?

Also called a one-pay lease, this is a lease in which you pay the entire run of monthly payments upfront. There are two primary reasons for going this route. One, it usually reduces the interest or money factor rate. You wind up paying hundreds less than if you were to pay monthly. Two, if your credit is questionable, a single, up-front payment may motivate a leasing company to take a chance on you.

How Long is a Car Lease?

You may find carmakers offering leasing specials of odd durations, 39 months, for instance. But, generally, leases are for 24 or 36 months. You can, however, find leases out there for longer terms. As with financing, the longer the term of the lease, the lower the monthly payment. That difference, though, may not be much.

What is a Leasing Mileage Cap?

Even when you finance a car, the higher the mileage when you sell it or trade it in, the less it’s worth. The difference with leasing, the lessor factors in a specific number of miles when estimating depreciation. Over the course of a lease, the allowable mileage or mileage cap might average out to 10,000, 12,000, or 15,000 miles per year. Exceeding the mileage cap reduces the car’s value at the end of the lease. This is why a leasing company will charge you a predetermined penalty for each mile over the cap. Be sure you know the per-mile penalty before signing the lease.

Can a Car Lease Be Extended?

Say you haven’t found a replacement vehicle, and you are at the end of your lease. Is there a way out? Yes, most lessors will gladly extend the lease on a month-to-month basis or for a fixed number of months. You will have to continue making the monthly payment. Also, in the case of a multi-month extension, you may have to sign another contract.

What Are the Key Leasing Terms I Need to Know?

We have been using some reader-friendly shorthand in this guide, but here are the formal leasing terms you should understand.

  • Acquisition Fee: This is a fee a lessor charges for setting up the lease. This fee varies greatly and can be as much as $1,000. Ask before signing any lease what fees get included in the acquisition fee. Fees you might see could include destination charges and documentation fees for processing the lease title, license plates, and car registration. It is firm and can’t be negotiated away. However, it can be folded into monthly payments.
  • Allowable Mileage: Also called the “mileage cap,” it is the average number of miles per year you can drive the car. The lessor will penalize you for every mile above that number.
  • Capitalized Cost: This is the agreed-on selling price of the vehicle plus any fees to be included in the monthly payments.
  • Capitalized Cost Reduction: Also called cap reduction, it is any element lowering the capitalized cost. It usually takes the form of a down payment or trade-in allowance.
  • Depreciation: The lost value of the vehicle over the course of the lease is the depreciation.
  • Disposition Charge: This is a charge to clean and dispose of your car at the end of the lease. You may be able to negotiate it away if you buy the car or lease another from the same agency.
  • Drive-Off Fees: Any fees and deposits due to begin the lease. Don’t forget that sales tax will be due for your lease transaction. Ask the lessor what fees are included in the drive-off fees. You may be able to negotiate some of the lessor’s tacked-on fees.
  • Early Termination: Breaking a lease contract before the end of the leasing period. If you want out of your lease early, it will cost you dearly. You may need to come up with a sum of money equal to the remaining payments.
  • Gap Insurance: Some leases automatically include gap insurance in the capitalized cost. If the car is a total loss through theft or collision, your insurance may not cover the entire loss. Gap insurance pays for what your car insurance doesn’t pay.
  • Lessee: The party leasing the car.
  • Lessor: The entity financing the lease. It could be a bank, credit union, or a carmaker’s financial division.
  • Money Factor: In financing, this is called the interest rate, but it looks markedly different. As with financing, though, the higher the money factor, the larger the monthly payment.
  • Payoff Amount: This is what it will cost you to buy the car at the end of the lease. It should be roughly the residual amount minus any security deposit.
  • Term: The length of the lease.

Is it Possible to Lease a Car for One Year?

It is possible to lease a car for one year. But, why would you? A car depreciates as much as 30% by the end of the first year. Because your monthly payment is based on depreciation, that one year will be wildly expensive. You might do better with a long-term rental car. It’s worth checking out. Another idea you could try is a club. These are offered by luxury car club leasing companies and sometimes by manufacturers. The clubs allow members to drive new models for short periods of time. They usually include insurance and don’t require a long-term contract.

Can I Lease a Used Car?

Yes, you can lease a used car. In fact, most dealerships offer leasing incentives on their certified pre-owned (CPO) vehicles. These are gently used, newer model cars with factory warranties and other CPO benefits.

How to Lease Your Car

For the most part, the process of shopping for a leased car is about the same as shopping for a vehicle you plan to buy. Research is the key. Other steps to take include:

  1. Check your credit score. A credit score under 600 will be a very tough sell. When your credit score is low, the down payment is typically larger to get approved. The higher your credit score, the lower the money factor.
  2. Crunch the numbers. Figure out how much cash you can pay upfront. Some deposits and fees must be paid when you sign a lease, and many are not negotiable. The lessor may also demand a down payment.
  3. Determine the average annual mileage you drive. Your lease will have an average annual mileage cap of 10,000 to 15,000 miles. Be realistic about your driving habits. You will pay a penalty for every mile over the cap.

What to Look For in a Vehicle to Lease?

Find a model that retains its value. Some brands of vehicles simply retain more value as they grow older. Brands like Subaru, Lexus, Jeep, and Ram tend to retain much of their value through the years. When you buy a vehicle, value retention is important, but not until you sell it or trade it in. Value retention in a leased vehicle is important because the more value a leased vehicle is expected to retain, the lower the monthly payment.

What Questions to Ask Before Signing a Car Lease?

Here’s a list of questions to consider asking the dealership or other lessor before you leap.

  1. What is the residual value for the car I’m leasing?
  2. Once the lease ends, what is the price I can buy the car for?
  3. What is the money factor? If you don’t want to do the math, ask for it in percentage form.
  4. What is the monthly payment grace period?
  5. What is the delinquent fee for late payment?
  6. Will I be charged any other fees at the end of the lease?
  7. What are the penalties for early lease termination?
  8. What is normal wear and tear?
  9. How much do you charge per extra mile driven?

How Can I Reduce a Monthly Lease Payment?

  • Reduce the capital cost by negotiating a lower vehicle purchase price.
  • Ask for a lower money factor. Particularly if your credit score is over 750, go for a lower rate.
  • Put additional money down or, if there’s a trade-in, negotiate for a higher trade-in value.
  • Shop other dealers for a better deal.

What Are the Negotiating Points in a Lease?

  • The vehicle purchase price is framed as the capital cost.
  • The down payment.
  • The trade-in value.
  • The money factor.
  • The disposition fee.

What Can’t You Negotiate in a Lease?

  • Residual value is generally set in stone. You can give it a try, but don’t expect much.
  • Acquisition fee. This is a charge that lessors rarely budge on.

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