Are you thinking about leasing a vehicle? Vehicle leasing is tempting for many people because the monthly payment is usually less than purchasing a vehicle. However, there are certain disadvantages to leasing a vehicle that you should be aware of. The Federal Trade Commission provides valuable information about the keys to vehicle leasing that'll help you make the right decisions.
Characteristics of Vehicle Leasing
You must remember that you aren't purchasing a vehicle when you lease it. You're paying money to drive someone else's vehicle. The vehicle must be returned at the end of the lease. Monthly payments are lower for leasing than buying since you aren't gaining any ownership interest in the vehicle.
Most vehicle leases will include a mileage limit. You'll have to pay charges if you go over this limit when you return the vehicle. There's usually an early termination charge as well if you want to end the lease before its term is up.
Costs Throughout the Lease
You're entitled under the law to cost information before you have to sign a lease. Always remember the complete cost of leasing a vehicle. It's easy to focus on the lower monthly payment and miss all the other expenses. There will be costs at the beginning, middle and end of the lease. Some examples of costs you may have to pay at the beginning of a lease include:
- First monthly payment
- Security deposit
- License, registration and title fees
- Processing fee
- Destination charges
- State and local taxes
- Capitalized cost reduction down payment
Some examples of costs you may have to pay during the lease include:
- Monthly payment
- Insurance
- Maintenance costs
- Late payment fees
- Inspections for safety and emissions
- Early termination charge
- Additional taxes
Some examples of costs you may have to pay at the end of the lease include:
- Charge for going over the mileage limit
- Excessive wear charge
- Disposition fee
Comparison and Negotiation of Lease Terms
You should compare lease offers to determine the best deal. Match up the lease terms for each offer to easily see the advantages and disadvantages. Some of the lease terms can be negotiated to help lower the overall cost of leasing the vehicle. Examples of lease terms that may be negotiated in your favor include:
- Lease length
- Mileage limits
- Vehicle value
- Up-front expenses
- Charges at the end of the lease
- Monthly payment
- Purchase option before the lease term is over
Rights and Responsibilities
Know your rights when you lease a vehicle. You're entitled to the use of the vehicle for the length of the lease. You can turn in the vehicle and walk away once the lease term is over. You can also take advantage of any purchase options in the lease.
You're responsible for taking care of the vehicle during the lease. Unless you purchase the vehicle at the end of the lease, you must pay charges for excessive wear. You also have to pay excess mileage charges since the vehicle is of lower value the more miles it has on it.
Contact your leasing company or dealer if you have any questions about your rights and responsibilities. Your state Attorney General's office or consumer protection agency can help inform you of any state laws that may provide consumer rights not included in the lease. For additional information, contact the Federal Trade Commission or Federal Reserve Consumer Help.
Questions for Your Attorney
- I lost my warranty information for my car. Who do I contact to find this information?
- My dealer lied to me about the lease terms. What are my options to get my money back?
- I lost my job and can't afford my lease payments. Is there any way to terminate the lease without paying a penalty?