How many miles do you drive annually? Most leases require that you stay below 15,000 miles per year, some require you drive less than 12,000. Take a look at your driving history and see how many miles you’ve averaged over the past four or five years. If you’re not sure whether you can stay below 12-15,000 miles, then leasing is not a good idea.

Are you good at taking care of your car? Do you clean your car regularly? Are you good at avoiding dents and dings? What about stains, tears, and rips in the interior? Most leasing companies require that their vehicle comes back in excellent shape, so if you get some dents, scratches, stains, tears, etc., they will charge you for them. Some leasing companies will even charge you a fee if the vehicle has to be thoroughly cleaned.

Is the lease you’re considering “closed-end?” “Closed-end” means that the future value of the leased vehicle is pre-determined and printed on your contract. More than 90 percent of leases are closed-end, especially leases from major manufacturers such as Ford, Honda, and Toyota. However, if you’re not sure that your lease is closed-end, or if your contract doesn’t have a buyout price printed somewhere on it, then it’s probably an open-end lease, and these are very bad for consumers.

Here are some good reasons to lease:

• You get more car for your money - you can lease a nicer car than you might be able to afford to buy.

• Vehicle is usually covered under warranty during the term of the lease.

• Great for people who prefer to drive a new car.

• Also great for people who don’t like the hassle of selling or trading in their used cars

• No down payments (if you do it right, you have no out-of-pocket up front).

Are you planning on buying out your vehicle when the lease is over? It’s usually not a good idea to lease a car with the intention of buying it. It often costs more to lease a car and buy it out later than it does to simply buy it in the first place, but a lot of people choose that option because it’s a good way to keep monthly payments down while still getting the car they want. Before you take a look at “leasing to own”, think about getting extended-term financing. A good place to check would be with your local credit union.

Lastly, if you’re using your vehicle for business you should talk to your accountant. Leasing may or may not be a good idea, based on the business you’re in, but your accountant can tell you for sure.

As always, take your time when buying a new car. Do your new car research, get multiple new car financing quotes, and feel free to contact us with your questions.

Reasons People Lease:

• The monthly payment needed to lease a car is usually less than the payment needed to buy that same car. This is the main reason most people lease.

• Since most leases only last two or three years, you probably won’t have to pay for any repairs because the car will be under warranty as long as you’re leasing it. That means your expenses are lower when you lease than when you buy.

• Leasing offers you more options than buying. At the end of your lease, you can give the car back, you can buy it at a pre-determined price, or you can trade-in or sell your leased vehicle.

Reasons People Don’t Lease:

• Mileage requirements. If you drive more than 15,000 miles per year, leasing probably doesn’t make any sense for you. Leasing tends to be too expensive if you drive more. NOTE: You’ve got to be careful about estimating how many miles you’re going to drive. Be realistic. If you underestimate, you could have to pay thousands of dollars in mileage penalties at the end of your lease.

• Condition requirements. Remember that when you lease a car it’s not your own - you have to keep it in perfect (or near perfect) condition. If you’re the type of person that can’t guarantee that your car is going to be in good condition when you bring it back in two or three years, leasing is not for you.

General Leasing Tips:

Fees. With leases, we always tell people to look out for hidden fees. It’s not uncommon to see a “vehicle return fee” or a “lease buyout fee” – these charges are bogus. If you don’t understand a fee, ask someone to explain it to you.

Early Termination. While it is possible to get out of a lease early, it’s very difficult. It’s best not to lease unless you’re certain that you can keep the car for the full term of the contract.

“Open” Versus “Closed” End Lease. When it’s time to end your lease, you want to make sure you don’t have to worry about paying any balloon payments. With a “open-end” lease, you might have to sit down and negotiate your final payment. With a “closed end” lease, you have nothing to worry about.

Don’t lease a used car. You may see used car leases being advertised, but they just don’t make any sense. For the amount of money that you pay to lease a used car, you could probably BUY the same used car for the same payment. Besides, you’re not going to save any money on expenses leasing a used car like you would leasing new. Used car leases are almost always a bad deal.

One final point - if you’re getting a vehicle for your business, consider leasing. Talk to your accountant to make sure, but real estate agents, small businesses, and large corporations tend to lease their vehicles - maybe you should too.

As always, take your time when buying a new or used car. Do your car research, get multiple financing quotes, and feel free to contact us with your questions.