Don't Get Ripped Off Leasing a Car!
Leasing a car, truck or other vehicle is a popular alternative to purchasing a new vehicle.
With the abundance of special offers and incentives from both carmakers and dealerships, its important that consumers understand what they are getting into when they sign a lease.
The resources on this page provide information about leasing versus buying, how to understand the true costs of a lease and the rights and responsibilities of consumers and dealerships.
Leasing versus Buying
As CNN Money revealed, consumers who lease a car instead of purchasing one typically end up spending more money than they would have had they simply financed the vehicle from the beginning.
But, that isn’t the case for all consumers. There are times when it makes more sense to lease a car. The following articles and pages can help you decide what is right for you:
- USA.gov: This official web portal of the U.S. government offers tips for leasing a car as well as resources to compare leasing versus buying.
- Forbes article titled, "Lease or Buy? More Customers say Lease"
- U.S. Bank tips on whether you should buy or lease a car
- AutoObserver.com, an established automotive authority, displays purchase versus lease trends over a 13-month comparison
- HowStuffWorks' article on "Should You Buy or Lease a Car?"
- CNN Money article titled "Should You Buy or Lease a New Vehicle?"
- Sixt auto rental company explains the benefits of leasing a vehicle
- U.S. News compares the differences between leasing and buying a vehicle
- Audi enlightens on how it is possible to lease a car to start out, then make payments to purchase the car in a "lease to own" scenario
How Much Does a Lease Cost?
Leasing Vs. Buying a Car
Example of Cost
Before you make a decision, create a table like the one below that compares the monthly costs for leasing versus buying a car.
Lease or Buy | Purchase Price | Down Payment | Monthly Payment | Total Spent After 36 Months | Residual Value of Vehicle | Real Cost |
---|---|---|---|---|---|---|
Leasing | $33,595 | $2,000 | $359 | $14,565 | $0 | $14,565 |
Buying | $33,595 | $6,719 at 20% | $825 | $36,419 | $23,701 | $12,718 |
Note: 1. When you lease, you rent the car. As a buyer, though taxed by higher monthly payments, you gain equity in the actual vehicle. This is money that can be used as a down payment on another new vehicle. 2. The lease would have saved a lot of up-front costs, but the buyer gains $2,000 in the long run. 3. This example does not include taxes and fees, which vary by region. Trade in values were provided by Edmunds.com. |
Here are other resources that will help you determine how much that lease will really cost.
- Edmunds.com car tips and advice website analyzes the different costs of car leasing
- BankRate.com offers an auto lease calculator to figure out what a lease will actually cost once tax, lending rates, down payment, and other fees are taken into consideration
- CNN Money presents tips for consumers on how to negotiate the cost of car leases
- Wall Street Journal published an article titled "How to Lease a Car and Get the Best Deal"
- Yahoo! Autos monthly car lease calculator helps estimate financing totals on a leased vehicle
Leasing Guides and Consumer Information
These guides provide valuable consumer information when considering a lease.
- Best Cars this automotive resource supplies information on lease options and payment guides that meet different consumers' needs and desires
- AutoMobileMag.com: a comprehensive and in-depth search engine for prices, lease options and terms, lease rates, and leasing availability by make and model
- Wei Lei of Auckland University of Technology's Dissertation, An Investigation on the Perceived Value of Vehicle Leasing, including cost, maintenance, ease and problem orientation
- State of New Jersey's "Don't Be Taken for a Ride: Guide to Leasing"
- Cars.com: Reviews on leasing dealerships around the nation
- LeasePlanUSA's "Leasing 101: A Fundamental Course in Leasing"
Government Agencies
Your local or state DMV is a good place to start. You may also want to look for information from the following agencies.
- The Board of Governors of the Federal Reserve System: This org. upholds the law that consumers have rights to specific information about their vehicular lease, including costs and terms of the lease agreement.
- U.S. General Services Administration: This federal org. supplies information on how to lease a vehicle from the General Services Administration (GSA) Fleet. GSA Fleet is one of the largest federal fleets in the nation with more than 200,000 non-tactical vehicles.
- Federal Trade Commission: it is this federal agency's responsibility to prevent unfair and fraudulent business practices, including in the automotive marketplace
- National Vehicle Leasing Association(NVLA): since 1968 this organization has been advocating for regulations and legislation that will impart fair and ethical vehicular leasing
Leasing's Popularity Gaining Again
Sales vs. Leases of New and Used Vehicles: 2000 to 2009
Type of Vehicle | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 |
---|---|---|---|---|---|---|---|---|---|---|
Passenger Cars – New | 9,000 | 8,550 | 8,300 | 8,050 | 8,220 | 8,020 | 8,150 | n/a | 7,110 | 5,580 |
Passenger Cars – Leased | 2,710 | 2,510 | 1,950 | 1,810 | 1,880 | 1,922 | 1,968 | n/a | 1,723 | 1,343 |
Light Trucks – New | 8,410 | 8,700 | 8,500 | 8,620 | 8,630 | 8,970 | 8,310 | n/a | 6,190 | 4,700 |
Light Trucks – Leased | 2,580 | 2,050 | 1,998 | 1,592 | 1,564 | 1,576 | 1,750 | n/a | 1,292 | 1,160 |
Total Vehicles Sold | 17,410 | 17,250 | 16,800 | 16,670 | 16,850 | 16,990 | 16,460 | n/a | 13,300 | 10,550 |
Total Vehicles Leased | 5,290 | 4,560 | 3,948 | 3,402 | 3,444 | 3,498 | 3,718 | n/a | 3,015 | 2,503 |
Total Passenger Cars Sold or Leased | 22,700 | 21,810 | 20,748 | 20,072 | 20,294 | 20,488 | 20,178 | n/a | 16,315 | 13,053 |
Source: U.S. Census Bureau |
After achieving record-high numbers earlier in the 2000s, auto leasing had leveled off over the past year and a half.
Research is showing that leasing is becoming increasingly popular again however.
Below are articles explaining why consumers have started leasing again.
- Bankrate explains why vehicle leasing has made a comeback since 2009
- KPMG International: the KPMG firm, known for providing tax and auditing services worldwide, explains why long-term automotive trends look good for leasing
- WardsAuto.com: an authoritative auto source for 80+ years, this company explains why more women than men prefer to lease vehicles
- CBNC: a recent article reveals that as auto loan rates skyrocket , consumers are shifting more and more toward leasing
- InAutoNews: Experian Automotive data have revealed that vehicular leasing has peaked at 27.6 percent, a record high for the leasing industry , and moreover the average monthly lease payment as of September 2013 was roughly $50 less than a loan payment for a new vehicle
- The flip side–Automotive News' take on why leasing will flop compared to the high expectations of dealerships
- Honda lays out the benefits to leasing one of their new vehicles
Leasing Statistics in the United States
Looking for the statistical information behind the recent growth in vehicle leasing? These resources will help you find what you're looking for.
- New York Times article titled "Auto Sales are Soaring, Propelled by Leases"
- Vehicle Leasing Markets and Forecasts by ReportLinker
- WardsAuto.com: This massive automotive database includes current data on exports, factory sales, inventory and annual, monthly and quarterly production.
- Research and Innovative Technology Administration's Bureau of Transportation Statistics , including used and new passenger car purchases and leases
- Consumer Survey Data by the Monthly Labor Review: including vehicle ownership, purchases and leasing
- United States Census Bureau: Leasing industry statistics sampler
- Journal of Urban Economics: An Exploratory Analysis of Automobile Leasing by U.S. Households
- MarketResearch.com: this comprehensive wealth of automotive knowledge and statistics presents stats on leasing, loans and financing
- NADA Automotive Market Report 2012: market analysis and upcoming year forecast
Frequently Asked Questions
The ins and outs of the most popular questions for how to lease a vehicle.