Not sure if a lease is worth it? Calculate the total cost to see how much you might pay.
When you’re comparing different leases to see which will work better for your budget, you can use these examples to help guide your expectations:
|Car lease offer A||Car lease offer B|
|Estimated residual value||$16,000||$12,000|
|Lease term||2 years||3 years|
What do these car lease terms means?
What other costs should I consider with a car lease?
When you decide to lease a car, there are other factors to consider than just the interest rate and monthly payment. Insurance, extra mileage and excessive wear can all increase the price of your vehicle.
- Insurance. Your lessor will likely require that you carry full coverage during your lease term. Depending on the make and model of your vehicle — as well as any past accidents — this can add a few hundred to a few thousand dollars to the yearly cost of your lease.
- Extra mileage. Most leases come with a set number of miles you can drive each year, usually between 10,000 and 15,000. If you go over, you may be charged a fee per mile.
- Wear and tear. If there’s any excessive wear on your vehicle, you may be charged a fee for damages and for potentially reducing the car’s resale value.
- Residual value. Your monthly payment is set by the estimated residual value on your vehicle. If it’s worth less at the end of the lease term, you may have to pay extra fees. But if it’s more, you may be cut a check for any amount you overpaid.
If you prefer to be behind the wheel of the latest car model or only plan on driving a few thousand miles each year, a car lease might be right for you. But calculating how much it will cost you in the short and long term can help ensure you find a lease that works with your budget and lifestyle.
You can read our guide to leasing versus financing a car to learn more about your options.