10 Steps to Leasing a New Car
Step 2: Design your lease deal: years, miles and insurance.
Edmunds.com recommends that people lease for no longer than three years. All carmakers offer at least three-year bumper-to-bumper warranties so if your lease is for three years, you will always be under warranty. Furthermore, a car can begin to show its age at about three years, right at the time the lease is ending.
Many people extend their leases to four and five years to reduce the lease payment. But this means you're investing more money in a vehicle that will never be yours and might need costly repairs. So it's better to shop wisely for a competitive lease deal and keep your commitment to three years.
You should also know that most lease contracts include only 12,000 miles a year. If you drive more than 36,000 miles in three years, the dealer charges 10-15 cents for each additional mile. You can buy extra miles up front, usually for 5 cents per mile and have this rolled into your lease payment. This pay-as-you-go approach prevents any unpleasant surprises at the end of the lease.
And finally, it's smart to call your insurance agent to find out what the coverage will be for the car you want. Lease companies require higher levels of coverage than many individuals carry for their own personal cars. The lease company's liability is higher, and it passes this extra expense along to you.
Next Step: Estimate your lease payments