What to know before leasing a new car

Should you lease a new car? What does it mean to lease a car, anyway, and what are the pros and cons of doing so? Learn that and more here.

1. When you lease a car, you pay for what you use.

In essence, you pay for the depreciation of the car value when you lease, not the car. If you lease a car whose value is $30,000 and its estimated value after three years is $21,000, the amount of depreciation is $9,000. Divide this amount by the number of months in the lease (3 years = 36 months) and that is your monthly lease payment.

Of course, there will always be taxes and various finance charges, but you are still paying for the depreciation of the vehicle in a leasing situation.

2. Leases are negotiable

Even though you see advertised lease specials, don't be fooled into thinking that these are set by the manufacturer. Individual dealers determine the selling price of a car, which then applies to the lease.

Don't be afraid to negotiate a lease special because the dealer has more control over pricing than they might lead you to believe.

3. Beware of fees

Dealers not only set the sales price of a car, they have the power to set fees based on their own discretion.

All leases will include an acquisition fee and a disposition fee, so know that these are standard; however, some dealers will mark these up. Ask the dealer to explain the fees and their pricing structure before signing any kind of agreement.


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