Can you get screwed on a car lease?

Question

I'm about to go out and lease a car. I was wondering if there is anything I need to look out for, so that I don't get screwed over. I know not to go over the mileage that they give me. Also, What is a good lease deal vs. a bad lease deal? PLEASE HELP!!

Answer 1

The post by josh was very good.

"Buy things that appreciate in value, borrow/rent/lease things that deppreciate" ~ My Mom

While not always heeding motherly advice, i do lease most of the time. There are a few things to consider when leasing. One, that you are going to stick with in the miles. For me that meant i needed to assess my job security. Two, are you going to be ok with the fact that you've payed for a car for lets say 3 years, and at the end you won't have that car unless you elect to purchase. Three, how long do you like to keep your cars? For some people leasing is a great option. Others it doesn't work for them. Like the 10 people who have posted on here before me, most seem like they've either had a bad experience or heard or someone who had a bad experience. Leasing can be great it just depends on the person.

My suggestions if you are going to lease:
1. check the manufactures website. they will typically have a tab where you can check and see if there are any special leases. understand that you can lease a car like they have advertised with out that amount due at lease signing, your payment will increase, but then you don't have to come up with a lot of money.

2. don't lease a car for more than 48 months. and i'd suggest trying to stay away from 33, 39 or 42 months leases. you will have to pay for registration that you won't get back because the lease doesn't end on the year mark.

3. if you can afford to (monthly payment wise) put as little money down as possible. keep the money in your pocket. in a sense you are renting the car, why pay more then you'd have to.

4. when negotiating make sure to negotiate everything. unfortuantely some dealers just show you a payment for a certain amount of months. go in knowing what you want to pay for the car wether you were going to pay cash, take out a loan or lease. also have them work up some payments based on different scenarios. the rule of thumb for leasing is that for every $1000 dollars it equals out to around $30 dollars a month. if you feel mileage may be an issue, you can usually buy it cheaper upfront if you know you are going to be returning the car at the end. also have the dealership work up some numbers with different banks, sometimes the manufacturers bank isn't always the cheapest way to go. there is a rent charge that you have to pay on any lease known as the money factor. typically if there is a special going on, then that can't be changed, but if there is no special then that can fluctate. also the money factor is based on your credit score and how long the lease is. working the numbers for different months can lower or raise your payment substantially. the other fees to look for is, bank acquisiton fee (has to be paid), disposition fee, security deposit and purchase fee. the acquistion fee is what the bank charges to take in your lease, the disposition fee is a fee they can charge when you return the lease and don't purchase, the security deposit will typically be refunded when you return the lease or if you lease through the same bank again it can rollover to the next lease and the purchase fee can be charged when you elect to buy the car at the end of the lease. these are non-negotiable, they can sometimes be converted into a portion of the money factor, but they are there.

5. find out if the lease comes with gap insurance. this will cover you if the car is totalled, the difference between what your insurance company values the car at and what the actual dollar amount that the car is to the bank. since you are leasing and only paying for a portion of the car, if you don't have gap then you could be responsible for the entire car in the case of a total loss.

6. some lenders also offer wear and tear coverage. this can protect you from having to pay for things like, dents dings and chips in windshields at the end if you return the car at the end.

7. remember that you can treat this car like it is yours. in 2 years if you want something new you can trade it in. will it cost you money to get out of it....potentially, but it is always an option.

8. the other great thing about leasing, is typically you're leasing through manufacturers warranty, so financailly you may only be resposible for oil changes, brakes, gas and glass. no worries about paying for an a/c or transmission, etc.


good luck!

Answer 2

Leasing is the current trend now. 17% of new cars are leases. Just saw the figure on CNBC yesterday.
You have open and cosed end leases. You may want an open ended lease, that allows you to purchase the car when the lease is done, for an agreed price, the estimated residual value.

If you have, or think you'll have no interest in purchasing the car when the lease is up, then that is of no concern to you.

I'm not sure if they still have it, or if it was just a local thing, but they used to have a pretrade program. Every two years, you would trade in your car and get another one. You paid a monthly fee and just kept paying it and swapped cars every two years. So basically, it was a 2 year lease.

A lot of people are sorry they got into leases. They hate having paid so much money and not having anything to show for it after the lease was up. Especially if they had a mileage problem and went over, plus they may have hit up for abnormal wear and tear, and some body damage for a scrape they got in a parking lot, or door ding.

I prefer to buy, that way after a couple of years, the car is mine and I can drive it free. If you don't count gas, oil, maintenance and parts. But at least, it's mine and the taxes are paid.

Answer 3

Generally, leasing a car is a good option if don't intent to keep it more than 3-4 years or it's leased by a company. Besides the mileage, they will also charge you for any damage and more than normal wear and tear (which could be anything.) So what you are doing is: giving the cash as dowpayment, paying $200-$400 every month, you may end up having to pay more money at the end and you end up with: NOTHING. No car left to leave as a downpayment on the next purchase, absolutely nothing. You are better off just purchasing one at least there is something to show for it at the end of your payments.

Answer 4

The average trade cycle in America is 2-3 years. The average car loan is somewhere between 5-6 years. Ie people are trading cars in before they are paid for. Therefore you dont actually own the car if you trade it in before you have made the last payment to the bank. With that said Leasing is a good alternative for someone who is in this kind of trade cycle. They are constantly financing negative equity from their old car on top of their new car therefore becoming more upside down each and everytime they trade. Leasing will help you avoid this. You lease a car for lets say 36months. you have three possibly even 4 mileage per year choices ie 12, 15k 20, maybe even more but not sure on anything above 20k miles. After the end of your three year term you have the option of turning in the lease, keeping the car and refinancing the residual or balloon. Lets say you do decide to turn in the car and decide to get another new car on a lease. Ok imagine you financed a car with no money down on a 72 month note after three years how upside down do you think you will be? on average anywhere from 2k-5k dollars usually closer to 5k. (basically you owe that much more then your car is worth trade in value) with the lease lets say you drove 10k more miles then the lease alloted. Wll at 15 cents per mile you would owe 1500 dollars. And usually car companies offer extra incentives on top of rebates to lease customers so chances are you are in a lot better trading position coming out of a lease then if you would have financed the car. Bottom line is Leases are great for people who like to always have a new car and plan on always having a car payment. The majority of people who buy a car on a traditional finance plan say oh I am going to drive this car until the wheels fall off. Then things change Bigger family and that two seat pickup or sports car doesnt work or maybe the price of gas changes dramatically and that big suv doesnt really fit the budget anymore. So If you dont plan on keeping it lease it!

Answer 5

If You plan on BUYING it at the end of the lease, there wont be any penalties beyond the value of your car will be lower than if it only had 36,000 miles. You do need to maintain good credit to be able to borrow to pay for the car 3 years from now. And having WAY too many miles could affect what a lender will lend you on the car at that time. (That is, you might need a down payment or larger down payment) 2nd jobs are great ways to recover from financial mistakes/hardships. A 10-15 hour a week 2nd job wont kill you. And an added benefit is when you work more, you have less time to spend. I worked about 70 hours a week for about 3 months with no extra pay. I got promoted to a job I wasn't quite ready for but It was only a "temporary" promotion and if I didn't do a good job, I would have went back to my old job. So I worked my butt off to make sure I got the job permanently along with the substantial raise. (I was already salaried so no overtime) Ive met mexicans who work TWO full time jobs and are happy to do it. You need to start saving a little extra now so that when the lease ends, if the lender says you need to put $1000-1500 down, you will have it. $50 a month is easier than coming up with $1200 at once 2 years from now. Dont miss a single payment either or that could keep you from getting approved to buy it.

Answer 6

If you wont go over the milage, and you take good care of it, a lease is not so bad, because the rental price is usually from 100 to 200 dollars less per month then purchase. That's a big savings over time. It doesn't matter that you have nothing in the end, you just go rent another. The last rental we got, we got semi screwed, but it was our fault. It was our 3rd car, and was not to be used for anything other then comfortable traveling (Plymouth Voyager with the works) My daughter's car blew up, so she took my wifes car, and my wife ended up driving the rental and putting more milage on then we were supposed to. However it wound up ok, because we just changed it over to a purchase loan instead.

Answer 7

if you have never had a car lease why don't you read about this on Consumer Reports..the library will have back issues and also on line there is advice for car leases via consumer reports...yes, there is bad things about car leases and in the end they could cost you more money then you planned..

check out with other people wha are currently leasing a vehicle..i still buy my vehicle because i checked out the cost and it was not to my advantage..
but some people prefer this if they have a lot of money to spend and you always have a newer vehicle...but it is costly..so be prepared when you turn it in to spend more money then you anticipated....and if you go to buy that car you leased..the leasing company does not give you the best price...they are not fair as they will sell that car to a stranger rather then to you..and you have leased this car for two or more years..but check this out too..good luck..its going to cost you ...as a car or truck is the worst investment for your money...but it is a necessity

Answer 8

the only questio I have is why lease?... if you are making the payments, have to have insurance, pay for damage ect, why wouldnt you just own it and have something at the end?

lease companies by the car, make a profit, and let you use it , why not cut out the profit for them part, and an easy to understand contract... pay and you own it.. simple

Answer 9

I have never leased - mainly because I continue to hear horror stories of hidden 'issues'. Why not buy? It's actually easier to purchase than to lease.

Answer 10

car leases in general are a bad deal...youre paying a monthly payment, gas and maintenence costs, and at the end you have nothing...why not just buy the car?