How To Lease a Car

Feb 20, 2008 - 10:41 AM PST

What is a lease? It’s like renting a car. You don’t own it, so you don’t have the depreciation but you also get to give it back after your term is up. This is good for people who want new cars every few years and don’t drive over the mile limits. The lease payments are also lower than if you buy. If you buy they could extend the payment out over 7 years, which is crazy. Leasing also makes sense for someone who is self employed. It is easier to deduct the payment rather than depreciating a car you bought.
You have to have credit to lease a car, just like you do for buying and financing. You may need a co signer if you have no credit.

I have some great suggestions to get you into a lease. I use swapalease.com and leasetrader.com. There is also takemypayments.com. Out of the three, I recommend swapalease. You should register. On swapalease you only have to pay once for a lifetime membership. Leasetrader makes you pay every few months, plus $59 when you take over a car. They don’t help much at all. You still have to do all of the work of contacting the title departments and seeing what you need. I have taken over 4 different car leases over the years. You can put in your search criteria such as make, miles, payment etc.

Some people even offer cash incentives for taking over their lease. One time I got a $2000 incentive, plus another check from Mercedes for $1500 after the 19 months were up because the first owner had pre-purchased miles that were refundable. It is easier to take over a car’s lease if it is in the state where you live. The great deal I just told you about involved an out-of-state car, so I have to pick it up and transport it back home.

Sometimes you also have to pay an additional state tax. If it says ‘current price of $250’ and it is out of state, you will also need to add your state sales tax. When asking to verify the miles on the car, ask for a current picture with the date and the odometer. The only out-of-pocket fees are the transfer and/or application fees. They range anywhere from $0 to $600. I like the flexibility of shorter leases. For example, I had one for only 9 months.

You could always go the traditional way. You go to the dealer and haggle over price and terms. Most leases range from 24 to 60 months, or 2 to 5 years. They also have a Cap Cost Reduction. This is like a down payment that allows you to get the lease payment lowered. You have to read all the fine print and know what you are getting. The miles limits are usually 10K a year; you can pay extra for 15K a year. If you take over a lease you could get 24K a year if the car has never been driven.

Happy car hunting!

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