When you lease a new car, you sign an agreement that obligates you to certain terms and conditions for a specified length of time. You also have certain rights that are provided by that agreement.
Among the terms of a lease contract are: that you agree to make payments, in advance, every month, that you keep full coverage insurance on the vehicle, that you do not make modifications to the vehicle, that you maintain it according to the manufacturer’s guidelines, that you stay within your mileage allowance, and that you return the vehicle at lease-end in good condition. You also have the right to purchase the vehicle at lease-end for a guaranteed price specified in your lease agreement.
Car Leasing – Your Obligations and Rights
Car leasing is not renting. It’s a form of financing similar to a loan that requires you sign and agree to a contract or agreement that specifies what is required of you — and your rights.
Among the terms of a lease contract is the requirement to make monthly payments, a month in advance. Your first payment is due at the time you sign your lease agreement. Each payment consists of three parts: a depreciation charge, a finance charge, and sales tax (in most states).
Payments are calculated using a standard lease payment formula. Our Lease Calculator uses the standard formula.
Since leases are for brand new cars, the cars come with a full manufacturer’s warranty and Lemon Law protection (in most states). However, you are required to maintain your vehicle as specified in the Owner’s Manual for the warranty to be valid.
If your vehicle is damaged during your lease, you are required to have the damage repaired by a professional repair shop using only OEM parts. Your required full-coverage insurance should pay for any accident-related damages.
You should attempt to stay within your mileage allowance. If you see you are going over, change your driving habits or take measures to reduce your mileage if possible. If not possible, try to put away money each month to pay for the expected overage at lease-end.
If your vehicle is stolen or totaled in an accident during your lease, your full-coverage insurance will pay. However, it may not cover the entire remaining balance of your lease. In that case, your GAP insurance will cover that difference so that you will owe nothing more.
When you return your vehicle at lease-end, make sure you have repaired any major damages, replaced worn-out tires, and replaced any equipment that has been removed. Your lease company will schedule an inspection about a month prior to your return date.