When you lease a car, you’re paying for the right to use it for an agreed amount of time and miles. Consider these factors to figure out if leasing is right for you.
Know how leasing is different than buying. The monthly payments on a lease are usually lower than monthly finance payments if you bought the same car. With a lease, you’re paying to drive the car, not to buy it. That means you’re paying for the car’s expected depreciation — or loss of value — during the lease period, plus a rent charge, taxes, and fees. At the end of a lease, you have to return the car unless the lease agreement lets you buy it, usually for an additional amount.
Think about how much you drive. The annual mileage limit in most standard leases is 15,000 or less. If you want a higher limit, it will probably increase the monthly payment. That’s because the car loses value during the life of the lease. If you go over the annual mileage limit, the dealership will probably charge you an additional fee when you return the car.
Consider all the lease terms. When you lease, you’re responsible for excess wear and use, damage, and any missing equipment. You also have to service the car according to the manufacturer’s recommendations and maintain insurance that meets the leasing company’s standards. If you end the lease early, you may have to pay a substantial early termination charge.
Under certain circumstances, you can end the lease if you signed it before you joined the service, or if you get PCS orders to deploy OCONUS for at least 180 days. Then, you wouldn’t be responsible for an early termination penalty, but you still could have to pay reasonable charges for excess mileage and excess wear and use or damage and certain other fees.
