There has been a proliferation of dealers advertising leasing as a means for acquiring a vehicle versus buying. The reason is that the down payment and the payments usually are less for a lease than a purchase. Under a lease agreement the lessee is only using a portion of the total value of the vehicle.

Dealers promote leases because they hope to sell the lease customer on lower payments versus a purchase and in doing so divert the customer from negotiating a discount on the vehicle’s selling price.

The Consumer Leasing Act (CLA) requires the lessor to disclose the following information about your lease payments:

The number of payments

The amount of each payment

The total amount of the payments

The due dates or schedule of payments

Most leases impose a penalty for late payments. The CLA requires the lessor to disclose to you, before you sign the contract, the amount of the late-payment charge or how it will be calculated.

End-of-Lease Considerations:

In addition to knowing your initial and continuing leasing costs, you should understand the factors that affect your final costs. These may include an excess mileage charge, default penalties, an end-of-lease payment on an open-end lease, an excessive wear charge, and a disposition charge.

Questions You Should Ask When Leasing A Vehicle:

Termination:

What is the maximum amount I could be charged in an open-end lease if the vehicle is worth less than the residual value specified in the lease?

What is the mileage allowance? What is the charge if I exceed the mileage allowance?

What is the charge for excessive wear? What constitutes excessive wear?

What are the default charges?

What is the disposition charge?

Early Termination:

Under what circumstances can I terminate the lease early? Are there other circumstances under which I would be required to terminate the lease early ("involuntary termination")?

What are the total additional costs I may have to pay if I terminate the lease early?

Options:

Does the lease contain an option to purchase the car at the end of the lease?

What will the purchase price be?

Can my lease be extended? What are the conditions and the costs of extending my lease?

Will I gain any advantages by extending my lease?