Car Lease Options and Fees

car lease contracts and feesYou have a number of options and choices when you lease a car. You can of course choose any new vehicle you want, but you can also decide on the length of the lease in months (lease term), the mileage allowance, whether to buy extra miles if you think you need them, buy GAP insurance if it’s not provided for free, and whether to make a down payment (cap cost reduction). You can also choose, or refuse, to purchase add-on products and services offered by your dealer.


Lease Options, Fees, and Costs

Most new-car leases are offered for a term of 24 months to 48 months.  However, when you choose your term, make sure that it does not exceed the length of the new-car warranty that comes with the car. If the warranty expires in 36 months, and your lease term is 39 months, you are exposed to paying for expensive repairs for 3 months for a car you don’t own.

Most leases don’t require a down payment (cap cost reduction). However, making a down payment pre-pays part of your lease obligation and reduces your monthly payment amount. Some special lease deals may require a down payment.

Although a down payment is optional, there is still cash required at the beginning of a lease. You must pay your first month’s payment as well as official tag and registration fees. You might also pay sales tax on your down payment, if any, and an acquisition fee that is normal for all leases.

If you think you’ll drive more than the typical 12,000 miles or 15,000 miles in a normal lease, you can “buy” extra miles at the time you lease instead of paying an excess mileage fee at lease-end. It’s usually cheaper and you get a refund for any unused miles. Your monthly payment will be a bit higher.

GAP protection or insurance is typically provided free with car leases, although some lease finance companies now offer it as an option for a fee. It’s always good to have because it protects you in case your leased vehicle is stolen or totaled in an accident. It pays off the lease for you if your conventional auto insurance’s payment is deficient.

In most states, you pay sales tax only on your monthly lease payments, not on the entire value of the vehicle as you would if you purchased the vehicle. This saves you money and is one of the benefits of leasing.

You have the right to refuse a dealer’s offer to sell you high-priced add-on products and services such as paint sealant, fabric protectant, credit insurance, security systems, or rust proofing — all of which are usually not worth the cost to a customer, but high profit for a dealer. None are required for leasing.