Buying or leasing a car

COSTS OF LEASING A CAR

You have to return your car at the end of the lease in good condition and pay any "end of lease" fees. When you buy a car, you don't have to return it or follow any lease terms.

You'll have to pay upfront lease costs, which usually include:

• your first month’s payment
• a security deposit
• a capitalized cost reduction, and
• taxes, registration fees, and other dealer fees.

Leasing a car usually costs less than financing one. The payments are lower because you’re only paying for the car’s loss in value, plus lease fees.

Read your agreement carefully. Some dealers charge an early termination fee.

BENEFITS OF A LEASE

When you lease a car, you don't have to worry about the car losing value.

At the end of your lease, you have the option to buy the car for a fee. Or, you can lease a different car.

LIMITATIONS OF A LEASE

You can only drive so many miles each year in a leased car. Most companies set a limit of 12,000-15,000 miles every year.

You’ll have to pay for any extra wear and tear on the car.

BEFORE YOU SIGN

Shop around at different dealers. You can negotiate the terms of your lease, like:

• the actual price of the car
• upfront payments to reduce the cost of financing
• the length of your lease
• your monthly payments, and
• any end of lease charges.

Make sure you understand the financing terms. Ask for an itemized list of fees and check for hidden costs. Understand what happens if you end your lease early, go over your mileage, or return the car in poor condition.

Ask the dealer if they'll allow you to buy the car at the end of the lease. They should list a specific purchase price in your agreement.