Leasing a car rather than purchasing one outright may be a cost-effective choice, but there are some fine details that might trip you up. Be sure you read the fine print before signing.
Consumer advice experts at Edmunds.com offer these tips to help you make an informed choice:
You may be asked to pay a hefty fee up front to qualify for the comparatively low monthly payments. Repaying may become a problem if anything should happen, such as theft of the vehicle or a wreck. The insurance company would reimburse the leasing company for the value of the car, but the money paid up front likely would not be reimbursed to the lessee.
The advice is not to pay more than $2,000 in advance, and less if possible. That would increase the monthly payment, but you’d have the option of putting the “pre-lease” amount into 1:18 AMan interest-bearing account. Or use what you have to help make the monthly payments. If something happens to the vehicle during the lease term, you won’t lose a chunk of money to the dealer.
“Gap insurance” is a very good idea. It covers you if the vehicle is stolen or totaled and your regular insurance doesn’t cover the full amount of its value under the lease terms. Like all vehicles, a leased car loses value as soon as it leaves the lot. Ask before the lease is finalized if the contract includes gap insurance. If not, you may want to keep looking for a lease plan that does.
Underestimating the miles you have driven in a leased vehicle could cost you. Many leasing companies base their low monthly payments on a low mileage limit. When you turn in the vehicle, the overages on mileage could add significantly to the cost. Ask for a higher limit to begin with if you are pretty sure you’ll run over the mileage limit. That could result in a higher monthly payment. Balance it out before signing.
If you fail to maintain the vehicle, you could pay more for wear and tear when you turn it in. A rule of thumb: If a scratch or ding is larger than the size of a driver’s license or business card, it is likely to fall into the category of “normal use.” Be aware of the leasing company’s standards before you get into the deal. If there is significant damage, you can expect to pay in full.
Leasing for a long time may entail additional costs. After the car passes beyond its warranty, usually three years, any costs for maintenance, such as brakes and tires, becomes your responsibility. You are then putting money into a vehicle you don’t own. You pay those costs over and above the lease cost.