4 Tips for Leasing a Car

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - February 5, 2019

There are many things that can help you get the most out of your car leasing experience. Just like car buying, there are specifics to leasing a vehicle that you must pay attention to before diving into the process. Read on for some important tips to know before heading to a dealership.

4 Leasing Tips to Keep in Mind

Leasing a car can be a great way to get the latest and great vehicle for a fraction of the cost. Here are a few tips that can save you even more money on your leased car:

Tip 1: Residual Value Matters

Why would you want to pay attention to how much the vehicle you lease is going to be worth when you're done with it? The more value it retains, the less you're going to pay, because most of your lease payment is based on depreciation.

For example: If you lease a car for three years that's priced at $26,000, and the residual value is set at $13,000 (approximately half a vehicle's value is lost in the first three years), then the depreciation portion of your monthly payment is going to be around $361 a month. However, if you lease a $26,000 car that has a residual value of $16,000, then the depreciation portion of your payment works out to be just $278 a month.

Tip 2: Know What You Can Negotiate

Are all those fees you're being charged really necessary? Some things, like residual value and over mileage fees, can't be negotiated when you lease a vehicle, but many aspects of the lease deal can – and should – be negotiated. The name of the game is getting the best price possible, so remember that you don't have to settle for a price that seems unreasonable.

In leasing feel free to negotiate these prices:

  • Capitalized cost (or cap cost)
  • Documentation fee
  • Money factor (possibly)
  • Cap cost reduction (although this won’t change the overall cost of the lease)
  • Buyout price (what you can buy the car for at lease end)

Tip 3: Don't Underestimate How Much You Drive

All leased vehicles come with a mileage limit built in. Typically, leased cars have lower total mileage limits that work out to be between 10,000 and 15,000 miles a year, but you can always buy extra miles.

If you think you're going to do a lot of driving, buy that mileage upfront. It usually costs around 15 cents per mile when you buy extra miles beforehand, while over-mileage fees usually fall somewhere around 25 cents per mile. However, if you buy extra miles but don’t use them, you won’t get a refund at lease end.

Your best bet is to really think about how much driving you do, and calculate a rough estimate before you head to a dealership. Remember, little trips add up, and car leasing isn't always the best choice if you have a long daily commute.

Tip 4: Don't Pay too Much Upfront

Lease programs generally require some money up front, usually your first monthly payment plus whatever is "due at signing," including acquisition, title, and registration fees. Sometimes, manufacturers offer zero due at signing programs to draw buyers into leasing, but this is typically reserved for customers with the best credit scores.

If you want to lower your monthly payment, you can use a cap cost reduction, which is leasing terminology for a down payment. Be careful not to put too much down, however. Unlike buying, a larger down payment doesn't save you any money in the long run when you lease.

The Bottom Line

When you're ready to take the plunge into leasing, be sure and use these tips to help you get the best deal possible. If you're not sure if leasing or buying is best for you, do thorough research before you make a decision.

Need an extra hand in the research department? CarsDirect is here to help. You can use the many resources we offer from new and used vehicle deals, to our Car Loan Calculator, and even more advice on everything auto and auto financing related.

Then, when you're ready to buy or lease, even if you have bad credit, no credit, or bankruptcy, we can help connect you to a local dealer that has the lending resources you need. The process is simple to get started – just fill out our easy, no-obligation car loan request form, and we'll get to work finding you a dealership in your area!

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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