When you lease, you pay to drive someone else’s vehicle. Although leasing can involve lower monthly payments than a loan, at lease end, you still have no ownership or equity in the car. The Consumer Leasing Act requires leasing companies to disclose standardized information to lease customers. In addition to the information disclosed on a standardized form, you should always ask for an itemization of the capitalized cost. Shop as if you’re buying a car.
Negotiate all the lease terms, including the price of the vehicle. Lowering the lease price will help reduce your monthly payments. Get all the terms in writing. Ask about standards for wear and use.
Dings that you may regard as normal wear and tear may be billed as significant damage at the end of your lease. Ask the dealer to give you an example of the early termination charges, for example, if the car is totaled six months after the lease is signed.
Expect to pay a substantial charge if you give the car up before the end of your lease. Most leases allow you to drive 12,000 to 15,000 miles a year. Expect a charge of 10 to 25 cents for each additional mile. Make sure the manufacturer’s warranty covers the entire lease term and the number of miles you are likely to drive.
Get every item of equipment listed on the lease. Otherwise, you could be charged for “missing” equipment at the end of the lease. Before you sign the deal, take a copy of the contract home and review it carefully away from any dealer pressure. Be alert for any charges that were not disclosed at the dealership, like conveyance, disposition, and preparation fees. Make sure you got credit for any trade-in. You do not have an automatic three-day right to cancel a lease after you sign it.
When you finance a car, the finance charge must be stated as an Annual Percentage Rate (APR). There is no similar requirement for disclosing the cost of leases. “Lease rates” or “money factors” do not have standardized definitions and are not equivalent to an APR.