The drawbacks: You don’t own the car when the lease term is up. Leasing several cars over a long period of time is more expensive than investing in a single car. You may have to pay fees if you go over the number of miles on your contract; inflict damage or cause wear on the car’s interior, exterior, or driving performance; trade in the car before your lease term is up. The advantages: You can drive a car whose retail price you can’t afford. If you don’t hold onto your cars for a long time, leasing can ultimately save you more money.
Reduce your overall costs by choosing cars that have great gas mileage, good safety features, low maintenance costs, and time-tested dependability. [2] X Expert Source Bryan HambyCar Buying Expert Expert Interview. 11 June 2019. Just because you can lease a Mercedes Benz doesn’t mean you should ignore the Honda. Talk with your insurance agent about models that will keep your insurance premium low. If your insurance currently covers a 2004 GM, but you’re thinking of upgrading to a Jaguar, your insurance premiums aren’t going anywhere but north. Understand your insurance responsibilities. You will pay for the insurance on the car even if the leasing company says they supply it. In that case, the monthly payment is rolled into your lease payment.
Head and legroom Seating Visibility (especially blind spots) Engine power Handling Controls
Know about the invoice price of the car. The invoice price is the price the dealer paid for the car. While it’s not reasonable to expect to negotiate a price at or lower than the invoice, it’s a good general area to shoot for. Your final negotiated price should be somewhere between the invoice and the suggested retail price. Walk away if the salesperson brings a four-square worksheet into the negotiation. A four-square worksheet is a sleight-of-hand trick the dealership uses to confuse the buyer about their options. Some dealers work with it extensively. If your salesperson brings one out, tell him that you won’t continue negotiating until it’s been put away.
Know what your total “capitalized cost” will be. Your capitalized cost is a fancy terms for the negotiated price of the vehicle, plus the acquisition cost, plus the destination fee. [5] X Research source This is the money you’ll be paying, not including the monthly payments, in order to lease the car. Factor in any “capitalized cost reductions. " Capitalized cost reduction is any cash down payment, trade-in credit, or rebate that reduces your total capitalized cost.
You’d think you’d want a low residual value on your car after your lease is up. Say your car is worth $20,000, and the residual value is worth $10,000 after a 3-year lease. That means that you can buy the car for $10,000 after three years. Great, right? Not always. If you the residual is $10,000 after three years, that means you use up $10,000 of the car’s value during those three years. That means your average monthly payment, divided by 36 months, is $277 plus interest and fees. What if your residual is $13,000 after three years? That means you use up $7,000 of the car’s value, setting your average monthly payment at $194. Higher residuals mean lower monthly fees, although lower residuals mean you can buy the car for less once the lease is done.
Dealerships often levy a fee for turning in a leased car and not leasing another car from the same dealership. This is sometimes called a disposition fee. Dealerships also levy a fee for deciding to buy the car after the term of the lease has ended. This is sometimes called a purchase fee. These fees and surcharges are generally negotiable. Remember, the dealer is betting that you’re attached to the car enough to eat the fees, even if they’re noxious. If you’re willing to walk away, the dealer loses much of their power.
Realize that you will easily lose an average of half the value of the car to depreciation when the leasing period is over.
