Car Leasing Tips and Resources: What You Need to Know

  1. Home
  2. Auto Loans

Considering leasing a new car or truck? We’ve rounded up the best car leasing resources and tips to help you make an informed decision.

CreditLoan Team

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:

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.

Leasing Guides and Consumer Information

These guides provide valuable consumer information when considering a lease.

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.

Frequently Asked Questions

The ins and outs  of the most popular questions for how to lease a vehicle.

  • Do the lease payments include interest?

    Yes, part of the lease payment is equialent to interest.

  • How do leasers calculate rent charges on a vehicle?

    At the start of a lease, rent fees are added up by looking at the residual value of the vehicle, the lease term and the capitalized cost.

  • My lease does not show an interest rate. Why is this?

    Lessors do not legally have to disclose the lease rate or rent charge percentage. Likewise, there is no standardized way to calculate lease rates, and lessors are not legally held to do so in a certain fashion. The lease agreement should, however, make apparent the dollar amount of the rent charge, which is the equivalent to an interest rate on a loan.

  • Why do vehicle leases have mileage restrictions?

    The residual value of a vehicle is based on the expected mileage, so if a lessee drives more than a certain amount of miles, the value of the car is reduced exponentially. Lessors will charge fees for excess mileage to regain the loss of the car’s depreciation if a lessee does drive more than the agreed-upon amount.

  • What is the average amount of mileage that a lessee can put on a leased vehicle?

    Though the number may vary depending on the lessor or type of vehicle, most lease agreements state that it can be driven between 12,000 and 15,000 miles per year. However, the exact mileage will be clearly stated in each individual lease agreement.

  • Can lessees who desire or need more miles purchase additional mileage?

    Yes, lessees can often times work out higher mileage limits during the initial negotiations. If a higher mileage limit is agreed to, there is a chance that monthly payments might be higher, to compensate for the decrease in value of the vehicle as more miles are added. If, however, higher mileage allowance is not negotiated upfront, the lessee will incur extra charges when it is time to return the vehicle for the additional mileage they used.

  • Can lessees get refunds on unused miles?

    There are typically no refunds for unused miles unless the lease specifically says so. However, if a lessee purchases more than 15,000 miles up front, and fails to use more than 15,000, some lessors will refund the additional mileage that was purchased.

  • What is a good method for lessees to use when deciding whether or not to pay a down payment?

    A down payment, otherwise known as a capitalized cost reduction, becomes subtracted from the gross capitalized cost and then divided by the amount of months in a lease. Therefore, putting a down payment on a leased vehicle will simply reduce the lessee’s monthly payment.

  • Are there any rebates or incentives that can be applied to leases?

    Sometimes. Manufacturers, dealers, lessors, and assignees may be offering certain rebates and incentives which the lessee can either have credited to his or her lease agreement, or paid out separately, depending on the language of the rebate.

  • Why is there a preparation fee to the dealer in addition to the acquisition or administrative fee?

    Many dealerships charge the preparation fee to take care of the preparation costs for getting a vehicle ready to lease. Other fees, such as acquisition fees, administrative fees, bank fees, and assignment fees are in essence different names for the same type of service. They cover administrative costs like checking insurance coverage, accuracy of lease documentation, data entry for the lease, and the cost for running one’s credit report. Depending on the lease agreement, this fee can be included in the overall cost of the lease or paid up front.

  • Is it the lessee's or lessor's responsibility to insure the vehicle?

    Most leases maintain that the lessee is responsible for the insurance through the term of the lease agreement. Moreover, lessees are typically required to show proof of insurance coverage (insurance amounts, coverage dates, policy number, etc.) at the time of the lease signing.

  • How does insurance coverage differ between a leased and a purchased vehicle?

    Typically insurance rates and coverage do not vary between leased and purchased vehicles, however, the lease agreement might require the lessee to carry a higher amount of insurance than normal.

  • Do leased used cars come with a warranty?

    Sometimes. If the used car is new enough, it may still carry the manufacturer’s warranty on it. Then again, some used cars will carry warranties from the lessor if they have outgrown their manufacturer warranty.

  • What course of action should a potential lessee take if the lease was rejected and the dealership asks for more money?

    If a lease agreement is signed by both parties, it is generally binding although sometimes lease agreements hinge on the dealership being able to assign the lease to a third party. If lessees are contacted with news about a rejected lease, it is important to return to the dealership and inquire about the full details of the rejection and lease. Also, the lessee should inquire why they were turned down for the lease, and try to find another company that might approve the lease. In the event that a lessee chooses not to pay additional monies, and chooses to cancel the lease, they should make sure to get a refund on any signing fees and to get any traded vehicles back.

  • How much time does a lessee have to cancel a lease agreement?

    Typically lease agreements cannot be canceled once signed by both parties, although if the contract was signed at home, or the lessee’s place of business (in other words somewhere other than at the dealership), federal law allows a 3-day window in which the lessee may cancel the agreement.

  • Does the lessee receive copies of all parts of the lease agreement and any other papers which require their signature?

    Typically. Federal law commands that the lessee must receive a copy of all federal lease disclosures, but it is state law which determines what other documents must be given to the lessee. Lessees are advised to ask for copies of everything.

  • Can payments to the lease be made electronically?

    Typically yes, most lessors can accommodate electronic and even automated payments from the lessee’s bank account.

  • If the lessee needs to move out of state, can the vehicle be operated across state lines?

    Sometimes. There are lease agreements that prohibit the lessee from making a permanent move with the vehicle to a different state than the lease originated in. However, there are some lease agreements that state the lessor’s allowance to move out of state, though they are typically required to give a certain amount of notice to the lessor and must assume all responsibility for registering it in the new location.

  • Can a lease be terminated early by the lessee?

    It depends on what is stated in the lease agreement. Some contracts may state that the lessee must pay a penalty if the lease is ended early, and typically the earlier a lease is terminated during the lease term, the higher the fee will be.

  • What is the procedure if a leased vehicle is either totaled in a car accident or stolen?

    Many leases state that these types of unexpected and unfortunate events are grounds for early termination of the lease, but some leases will let the lessor substitute a comparable vehicle to the lessee to finish out the term of the lease.

Get a Loan For Your Dream Car

  • 100% free offers from lenders you can trust
  • More loan offers means more choices and savings
  • Buying new or refinancing — you've got options
Get Started
Get a Loan For Your Dream Car

Get a Loan For Your Dream Car

  • 100% free offers from lenders you can trust
  • More loan offers means more choices and savings
  • Buying new or refinancing — you've got options
Get Started

Leave a Comment