5 Mistakes in Car Leasing You Need to Watch Out For

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

, - July 9, 2019

Car leasing is a popular alternative to car buying – you often get lower monthly payments, and you can drive a new vehicle every few years. There are right and wrong ways to go about leasing a car, and we’re here to tell you the mistakes you need to avoid.

5 Car Leasing Mistakes

Just because you don’t own the vehicle during a lease doesn’t mean you shouldn’t take care of it and be prepared for the worst. There are specific things you need to think about when it comes to leasing, and if you make any of these five mistakes, you could find yourself in trouble:

  1. No GAP insurance – Most leases come with GAP coverage included, but if for some reason the one you’re considering doesn’t, make sure you sign up for coverage. You’re responsible for the difference between what you owe on the lease and the value of the car in the event it’s totaled or stolen, and GAP insurance covers this difference. Without it, you have to pay out of pocket, which could put you in a major financial bind, depending on the severity of the situation and where you’re at in the lease.
  2. Longer lease term – Most lease deals don’t stretch out past three years, but some leasing companies offer leases that can be closer to five, and you don’t want a lease that long. The reason being is because of the vehicle’s warranty period. Most warranties last up to three years or 36,000 miles, whichever comes first. If you lease past the warranty, you would need to pay for repairs that come up yourself – which would cost you even more for a car you don’t own.
  3. Not enough miles – All auto leases come with mileage limits, and you need to make sure you have enough miles. Most leasing contracts have a yearly mileage range of 10,000 to 15,000, and you must be at or below the mileage total by the end of your lease. If you're over mileage at lease turn in, you’re typically going to be charged 25 cents for each extra mile, and the cost can add up quickly. However, you usually have the option to purchase more miles for cheaper upfront. Know your driving habits, and pick the mileage cap that best fits your driving needs.
  4. Paying too much upfront – When it comes to leasing, there’s usually no down payment required. Other than fees, any money paid upfront is called a capitalized cost reduction, and it’s typically optional. When you make a cap cost reduction, you’re lowering the monthly payment by simply pre-paying the lease – you don’t actually save any money in the long run.
  5. Failing to maintain the vehicle – You don’t own a leased car, but you’re still responsible for making sure it’s in good condition. You should follow the vehicle’s recommended maintenance schedule, and make sure any issues such as dents, stains, and cracked glass are fixed before you turn it in. If you don’t maintain the car, you could be charged wear and tear fees at the end of the lease term. Make sure you ask the leasing company early on what they consider to be excessive wear and tear so you’re not caught off guard at lease end.

When Leasing isn’t an Option, Choose to Buy

Sure, leasing can be a great option if you want to drive the latest model every few years. Unfortunately, not all leasing companies work with buyers struggling with bad credit. It may be better to buy a vehicle through a special finance dealer and improve your credit so you can lease a car in the future.

If you’re looking for a dealership to work with and your credit is challenged, look no further than CarsDirect. We help by connecting consumers like you to local dealers that have the lending resources available to handle unique credit situations.

To get started, simply fill out our free and easy auto loan request form, and we’ll get right to work connecting you to a dealership in your area.

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

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