Save Money by Avoiding these Common Car Leasing Mistakes

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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.


, - September 5, 2018

Leasing can be a great way to get the latest car with all the newest features, but it isn’t right for everyone. If you’re considering a vehicle lease, make sure you steer clear of common pitfalls that could cost you in the end.

Before You Dive into a Lease

The first thing you need to understand is how car leasing works, and how your credit impacts the ability to lease. When you lease a vehicle, your monthly payment is based on the car’s estimated depreciation plus the money factor (financing charge similar to interest on a loan). Knowing your credit score is important because the higher it is, the lower your money factor is likely to be.

Six Common Pitfalls to Watch For

Depending on your situation, there can be many factors to be aware of in leasing. Here are six common car leasing mistakes to avoid that tend to trip-up lessees:

  1. Choosing a vehicle that doesn’t hold its value. Because monthly payments are based on depreciation, choosing a vehicle that depreciates slowly makes a big difference in how much you pay for the car each month over the lease term – which typically is two or three years. An overall cheaper vehicle that loses most of its value in the first two years could end up costing you as much as a more expensive car that holds its value better.
  2. Not purchasing enough miles up front. Driving too much and going over the mileage limit typically costs 25 cents a mile at lease termination. Knowing how much you truly drive in a year goes a long way toward saving some serious cash. Building extra miles in at the start of a lease can save you as much as 10 cents a mile. If that doesn’t sound like much to you, consider that a typical low-mileage lease includes around 12,000 miles a year. Now consider as a commuter, you drive about 80 miles a day roundtrip – that’s 20,800 miles a year, just getting to and from work! If you built that extra 8,800 miles into a 24-month lease, it’d cost you $2,640 or an additional $110.00 a month. If you didn’t, you’re looking at ponying up an extra $4,400 at lease end.
  3. Not taking care of your car during your lease. Anything over and above normal wear and tear has to be paid at the end of a lease. But just what’s considered “normal” varies by lessor when it comes to wear and tear. One of the best ways to make sure you’re not getting the short end of the stick on this one is to read the fine print in the leasing contract. It also means keeping the vehicle clean inside and out, performing regular maintenance, and fixing any issues outside of normal wear and tear items.
  4. Skipping GAP insurance. If your vehicle is totaled or stolen, your insurance typically covers the cost up to the value of the car. But what if you owe more than the vehicle is worth? Because new cars generally lose about 20 percent of their value as soon as they’re driven off the lot, you’ll want something to cover the difference between the vehicle’s value and what you owe – that’s where GAP insurance comes in handy. This is especially important in leasing. And while most leases – especially those of captive finance companies like Ford Motor Credit – include gap insurance, if it’s not included and you don’t purchase it separately, you end up having to pay the difference between the balance owed on the lease and the vehicle’s current value if your car is stolen or totaled.
  5. Paying too much money upfront. The same reasons you don’t want to skip the GAP insurance are the reasons you don’t want to put too much money down on a lease. A down payment doesn’t save you money on a lease the way it does when you’re financing a vehicle. In fact, it really just acts as a pre-payment. If you’ve pre-paid the lease and your car is stolen or totaled, you’re not likely to be reimbursed.
  6. Deciding to end your lease early. Early termination fees can really get you if you decide to call it quits before the lease term is up. Typically, you have to pay the remainder of the lease payments and additional fees if you try to get out of a lease ahead of time. Make sure you ask about these details at the beginning of your lease, so there are no surprises in the end.

The Bottom Line

Leasing a car comes with a lot of factors to take into consideration, but it can be rewarding if it’s the right choice for you. CarsDirect’s pricing experts analyze hundreds of lease deals each month to find the best offers, and models with good resale value are often some of the best lease deals. Being aware of the pitfalls ahead of time can help you avoid paying money if your vehicle is stolen or totaled, and incurring expensive fees when your lease ends.

If you’re on the fence between buying and leasing, make sure you explore all your options before you choose. Financing a car has a lot of perks as well. If you don’t know where to begin your search for your next car, let CarsDirect help. Not only can you research vehicles, but we can help match you to a local dealer that can help you get the financing you need. Simply fill out our fast and free auto loan request form, and we’ll help you get the process started today!

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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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