Leasing this year will account for 21% of new vehicle sales, according to Consumer Reports. When compared to buying a new car with a loan – leasing a car will lower your bill by an average of $139 a month.
But Consumer Reports Car Editor Keith Barry says to keep in mind that there could be reasons to avoid leasing, such as mileage restrictions and potential excess wear-and-tear charges.
When you begin considering leasing, know that you can negotiate the vehicle’s overall price -- also known as the capitalized cost in leasing -- and that can significantly lower your monthly payments. So, try to strike a deal that suits your budget.
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You can also negotiate your lease interest rate (also called money factor), which influences your overall payment; and your mileage allowance, especially if you anticipate driving more than the standard limit.
Maybe you are considering an electric vehicle.
“While the tax credit for buying an EV comes with lots of restrictions – where it’s built, how much it costs, where the battery comes from – all those go out the window if you lease,” Barry said.
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The dealer can claim the full $7,500 tax credit. So, first, negotiate your best price and then make sure that the dealer passes that on to you by taking it out of the overall price of the car.
Consumer Reports says to stay away from leasing a used car. You’ll encounter higher interest rates and limited manufacturer support. Plus, with the original warranty expired, you’re on the hook for repairing a car you will give back one day.
