Things You Need to Know Before Leasing A Car

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When you lease a vehicle, you are not the owner, but renting it from the dealership for a specific time. It is generally 3 to 4 years. As soon as, the lease agreement expires, you have an option to purchase it at a pre-determined amount defined in the lease agreement or return the car or extend the lease. Lease a car works differently than a car purchase. Buying means, you will own the car as soon as you pay off the loan.

Lease payments

The monthly lease payments are lower than loan premiums for a new car. The regular car loan monthly payments are calculated on the interest rate, sales price, and years to repay the credit. Alternatively, lease payment depends on the following –

  • Negotiated sale price
  • Agreed lease duration
  • Expected mileage
  • Residual value
  • Rent charge
  • Taxes & fees

Many manufacturers or deals ask for a down payment but remember putting a lot of cash upfront is not logical because you will be finally returning the car to the dealer. If you are certainly going to purchase the vehicle at lease expiry, then it helps to pay the down payment. The more upfront you offer, the lower will your lease payment per month will be.


Lease a car is the latest trend. You can think it to be a pay-for-use agreement. When you buy a new car, it depreciates quickly in the initial years. Leasing means you will drive a car during this steep depreciation phase therefore consistently leasing a new vehicle is the costliest way to drive. However, if you are excited to always drive a new model then leasing can make it happen without any hassle. Lease A Car Direct Services can help you lease your favorite car at low rates.

Leasing affects, the credit score

When you apply for leasing a car, it causes a credit investigation, which can impact your credit score a little. Car leases are installment loans that you need to pay without any default to see your score improve.

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Advantages of leasing

  • Low monthly payments
  • New car after every few years
  • Hassle-free regular maintenance
  • No concerns about repairs
  • No resale worries
  • Maximize tax deductions


Leasing a car looks less attractive if you consider the long term.

  • You have to pay an acquisition fee and don’t build equity.
  • Less flexibility because customization is not allowed.
  • If the vehicle is totaled before the lease expires, you are responsible for some expenses not covered in the insurance except the lease involves car gap insurance.

Leasing fees to look out for

  • Acquisition fees [Financing fee]
  • Delivery charge [Destination fee]
  • Disposition fee [Purchase option fee]
  • Mileage overage fee
  • Excess wear & tear

Lease-end options

When the lease expires, you will need to determine whether to return the car or buy it.

  • If car value is more than the purchase price – You can purchase it outright from the dealer and sell it to gain equity to purchase or lease a new car.
  • If car value is less than the purchase price – You must return the car and walk away.

Remember, if you return the car before the lease expiry then it can be expensive. You will need to pay a high early termination fee.