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Car Lease Pitfalls to consider when leasing a car
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- You are required to maintain the car that you do not own. You must pay for all maintenance (tune-ups, oil changes, brakes, tires etc.) and non-warranty repairs for a car.
- All four tires on the vehicle must match when you return it. You will be charged the list price to replace a set of mismatched tires. Tire(s) cost could be $400 or more added to the lease termination (vehicle return) fee (if any).
- Lemon Laws don't apply to leased vehicles in many states.
- Leases are difficult (read: expensive) to terminate early. The penalties are stiff, and there's no way to avoid them.
- More often than not lease savings will not be as great as the salesman will lead you to believe.
- Your auto insurance may get more expensive than on a current vehicle. Some lenders require you to purchase comprehensive and collision insurance with a $0 deductible. Higher liability limits may be required as well. Before leasing a vehicle give your insurance agent a call.
- Make sure dealer quotes you a lease with sales tax factored into the lease. The lease payments dealer quotes you may not include a sales tax.
If not, then the sales tax will be added to each monthly payment. Most states tax your monthly payment. But some states, reportedly tax the full amount of the car even though you are only using up 50% of the value upon return.
- You will be charged ten to fifteen cents for every mile you drive over a pre-set mileage limit, usually 12,000 to 15,000 miles per year. If you drive more than 15,000 miles a year -- don't lease.
- Your lease payments may not be that much lower than if you bought the car, specifically on a longer lease. Whatever advantages may be gained from leasing are lost when the term extends to more than three years.
- In case of an accident, your collision insurance will cover the repairs, but not your lease payments, taxes, or fees.
If the vehicle is totaled, you'll need Gap Insurance in order to be able to pay off the lease and the residual value of the vehicle. Contract terms are different as far as your obligations in case of an accident - read your lease contract carefully!
- In case of moving to another state be prepared to pay some of your acquisition fees all over again. At a minimum, new tags, registration, and insurance will be needed.
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