Questions to ask when leasing a car
Leasing a car is an attractive option for people who like to drive new cars but don’t like the typical new-car payments. When leasing, you pay for depreciation of the car during the time you’re driving it, rather than the full price.
But just like buying a car, leasing a car can be complicated, with a lot of options to sort through. Here some questions that can help guide you through the leasing process.
What is the length of the lease?
Leases typically range from two to four years. Check to see whether your monthly payments would change under a shorter or longer lease term.
What are the upfront costs?
According to the Federal Reserve, when you’re leasing a car you might have to come up with charges including the first month's payment, a refundable security deposit or the last month’s payment, a capitalized cost reduction (which is like a down payment), an acquisition or processing fee, freight or destination charges, state or local taxes, registration and other fees.
Are there mileage restrictions?
Since the vehicle is only temporarily yours when you’re leasing a car, most leases restrict you to a certain number of miles – typically an average of 12,000 to 15,000 miles a year. If you put more miles on the car, you’ll have to pay a hefty per-mile fee when you return the car at the end of the lease.
What will it cost me to get a lease with higher mileage?
You might be able to negotiate a deal allowing higher mileage when you’re leasing a car, but your monthly payments will be higher, the Federal Reserve says.
What constitutes reasonable “wear and tear”?
Make sure you understand the expectations the leasing company has of you for maintenance and repairs when you’re leasing a car. Most leases have a provision allowing extra charges at the end of the lease for excessive wear and tear – make sure you know what that is, and what you’ll be charged if you don’t hold up your end of the bargain.
What kind of insurance protection am I required to carry?
Leasing companies usually require you to carry certain levels of liability and other coverage when you’re leasing a car. It might be more than what you are carrying now, costing you more in insurance premiums.
What happens at the end of the lease term?
One option when you’re leasing a car is to turn in your keys and walk away, presuming you haven’t put any excessive miles or wear and tear on the car. If the lease includes a purchase option, you may choose to buy the car based on its value at the end of the lease.
Is there a fee for returning the car before the end of the lease?
There usually is, and according to the Federal Reserve, it can be quite hefty. Find out exactly what it will cost you to get out of the lease early.