with low interest rates that make buying a car more
affordable, many consumers are leasing a new car or
vehicle leasing climbed in the first three months of
2013 to the highest level in seven years, according to
Experian Automotive, a unit of credit data tracker
Experian. Leasing made up nearly 28 percent of all new
vehicles financed in the quarter — the greatest
proportion in records that go back to 2006.
have seen overall stability come back to the market
since the recession, and leasing has gradually
returned as a larger part of many lender
strategies," said Melinda Zabritski, senior
director of automotive credit at Experian.
has its perks, especially if you want to drive a new
car every couple of years while keeping monthly
payments low. But understanding whether leasing is
right for you and how complex lease agreements work is
essential to avoid ending up paying more than you
are six tips to get a good deal when leasing a new car
UNDERSTAND THE DIFFERENCE BETWEEN LEASING AND BUYING
buying a car and holding onto it for many years is the
least expensive way to own a vehicle.
cars and trucks depreciate, or lose value over time,
the vehicles retain some value that you can always
turn around and apply toward your next purchase.
if you lease, you only get to drive the car for a
fixed period of time. Your monthly lease payments go
toward paying for the depreciation in the vehicle, not
ownership. And there are restrictions on how many
miles you can rack up on the car during the lease
period. When the lease term expires, you can buy the
car or lease another new vehicle.
offers many benefits, particularly when it comes to
some dealerships will ask for some money down, the
monthly payment will typically be less than what you'd
pay if you borrowed money to buy the car.
the short-term commitment opens the door for you to
drive a newer car after a couple of years.
you're really focusing on your short-term financial
situation, lease has much appeal," Jeff Bartlett,
deputy editor at ConsumerReports.org. "But if you
have the luxury of looking long-term, buying will be a
not sure whether it lease or buy? Try running the
numbers through online calculators like this one: www.bankrate.com/calculators/auto/lease-buy-car.aspx
DON'T FORGET TO HAGGLE
have become accustomed to haggling over the price of a
car, down payment or interest rate on a loan when
buying a car, but few realize you can employ the same
strategy when you lease.
people fall into the allure of the low monthly price
that is being offered to them," Bartlett says.
"You're just handing over to the dealer more
a purchase transaction, experts recommend someone
contemplating a lease take steps to familiarize
themselves with the sticker price and any factory
incentives being offered on the car. Then haggle with
the sales staff to get a lower price before applying
the lease terms.
BE REALISTIC ABOUT MILEAGE
contracts include limits over how many miles you can
put on the vehicle. Once you go above the limit set
forth in the lease, you'll be charged a per-mile rate.
common annual limit is 12,000 miles, though some
drivers may be tempted to opt for as low as 10,000
miles to save money. Be realistic about how much
you'll need to drive, or you could face hundreds of
dollars in fees at the end of the lease term.
option is to prepay for additional miles at a lower
rate. But make sure you have it built into the lease
agreement that you'll be credited for any unused
AVOID LEASES LONGER THAN THREE YEARS
than half of all new auto leases are for between two
and three years, according to Experian.
are increasingly offering longer lease periods, but
you should resist leases that run for more than three
years, advises Philip Reed, senior consumer advice
editor for car research site Edmunds.com. That's
because longer lease terms can expose you to having to
pay for repairs such as tire and brake replacements.
THINK TWICE ABOUT BUYING YOUR LEASED VEHICLE
the end of the lease term, you'll have the right to
buy the car you've been leasing for a predetermined
amount known as the residual value.
few exceptions, you'll generally end up paying more
than if you had just bought the car to begin with,
advises that drivers get an estimate for the value of
their vehicle when they near the end of their lease
term before deciding whether to buy it.
REMEMBER THERE'S ALWAYS AN OUT
connect drivers who want out of their lease agreement
early with car shoppers looking to take over an auto