Leasing a car can be confusing - ask questions

Buying a car is complicated enough, but leasing one is another matter entirely. If you don’t know or don’t understand what you’re getting into, leasing a car can be a very expensive way to drive. Below are some things you may wish to consider or ask when discussing a lease with a car salesman.

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Auto leasing has its own set of terms; it pays to know them

Leasing a car generally makes less sense for most consumers than buying one, but there are exceptions. In those cases, you should understand how leases work and be prepared to ask the salesman some tough questions in order to make sure that you get the best possible deal and to make sure that you don’t have to pay any additional hidden penalties.

Here are some things you may wish to inquire about when discussing a lease at an auto dealership:

• How much is due at signing - Commercials make a lot of noise about low payments, but unless you read the fine print you may not realize that you’ll probably have to fork over several thousand dollars when you sign the lease. This may include deposits, title fees, license fees, and “capital cost reduction” which reduces your payments by letting you pay more up front. It can be a big chunk of money, so be prepared.
• The length of the lease - Lease durations can vary widely, and usually run from two to five years. Be sure you know how long you are agreeing to pay. If you want a car for two years, leasing for five won’t make any sense. And watch out for leases with unusual terms, such as 27 months or 51 months. They usually end up costing you more money.

• End of lease - At the end of the lease you may walk away, buy the car or continue leasing. It’s all spelled out in the contract; make sure you know and agree with what will happen at the end of the term. You will also have to pay at this time for any vehicle damage beyond normal “wear and tear.” The contract terminology can be confusing and can contain hidden fees, so be sure to read it carefully. If you are unsure, you may wish to consult with an attorney. It could save you some money.
• Mileage allowance - Your lease will spell out how many miles you may drive over the term of the lease. Every single mile after that will have a fee; it can run from 5-25¢ per mile. This figure is negotiable, but if you fail to discuss it and go over the allotted number of miles, you will pay dearly.
• Early Termination - What happens if you want to end the lease early? What happens if you have to end the lease early? You don’t plan to total the car in an accident, but then again, no one does. Some leases may require you to pay the lease in full. Make sure you ask about this or it could cost you a fortune.
• The money factor - The money factor is an odd term used only in leasing; it effectively amounts to the interest rate. The MF will be an odd number, but if you multiply it by 24, it will come to an amount that roughly corresponds to an interest rate. It is, like everything else in a lease, negotiable.

Leasing can be complicated, but it doesn’t have to be. If you aren’t sure about terms discussed by the dealer, ask.

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