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Setting a budget and understanding the typical costs can set you up for success when you want to lease a new car. But it’s not just a budget that will save you, comparing multiple offers — and using those offers to negotiate down your cost — is also key to finding a good deal. Before you even get started, make sure leasing is really worth the long-term cost.
Leasing can be a good short-term solution when you need a car. It gives you a lower upfront and monthly cost than a car loan. But it’s not a great long-term solution.
You could end up paying more in lease payments over a decade than you would have if you bought the car. And you might face steep penalties if you put on too many miles, damage the vehicle or want to return it before the contract is up.
If you think leasing isn’t right for you, check out our list of top auto lenders to help you finance your next ride.
Figure out how much you can afford to pay monthly for your lease. Add up your mortgage or rent payment, utilities and other recurring monthly expenses and subtract that from your monthly income after taxes. This will give you an idea of how much money you have left over each month to put toward your lease payments.
Keeping these costs in mind when you begin shopping can help you find a make and model that fits your budget.
There may be additional costs, like a down payment. But these are the most common numbers you’ll come across.
If you don’t already know what kind of car you want, take the time to carefully research what’s out there. Use the following resources to help you make your decision:
You might also want to contact your insurance company once you have an idea of the car you plan on leasing — it may impact your current rates.
Like car loans, leases aren’t one size fits all. While different dealerships might have their own special programs, most leases typically fall into two categories.
The most common type for individuals, closed-end leases typically allow you to return your car at lease end without worrying about the difference between the residual value of the car and its actual value. You also usually have the option to purchase the vehicle or extend the lease.
More commonly seen for businesses, an open-end lease puts all the responsibility on the lessee. This means you’ll have to pay the difference between the car’s residual value and its actual value at the end of your lease. So if your car isn’t worth as much as the dealership estimated at the beginning of your lease agreement, you may owe money — in addition to other closing fees.
Contact multiple dealerships to gather quotes on the car you’re interested in leasing. Ask what your monthly payment would be for your chosen term and mileage limit, noting the potential money factor and the car’s estimated residual value. You’ll also want to ask about your lease-end options, especially if you think you might want to purchase the car when your agreement is up.
For example, you might tell the salesperson that you want to lease a 2019 Jeep Wrangler for three years, expect to drive around 12,000 miles per year, don’t want to pay more than $1,500 in drive-off fees and want the option to purchase the vehicle at the end of your lease.
After you’ve gotten multiple quotes, use these as leverage to negotiate down some of the lease costs. Be aware of costs that are subject to negotiation and those that are not.
Once you have quotes from a few dealerships and negotiated as much as you can, choose the one that gives you the most bang for your buck. This might include a cashback bonus, low APR or small down payment — whatever setup benefits you most. In fact, some dealerships will even adjust your offer based on other dealerships, so don’t be afraid to try out your negotiation skills.
If you’re happy with your lease terms, it’s time to sign the paperwork. Most dealerships also require you to provide proof of insurance at this time.
After the last documents are signed, the car will be yours for the next few years. Just be sure to keep up with maintenance and track your mileage to avoid added fees at the end of your lease.
Here are a few tips to keep in mind to help you find a lease that benefits you the most:
Leasing can be a convenient way to keep things fresh and try out new tech features every few years. Looking into cars with high residual values and comparing quotes from different dealerships can help you snag a competitive deal.
You can learn more about how leasing compares to buying a car outright by reading our guide.
Still on the fence? Check out our guide to the benefits and drawbacks of leasing a car to help you decide.
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