Quick Guide to Leasing a New Car

All You Need To Know in 5 Easy Steps


  • Car Salesman Picture

    Car Salesman Picture

    Make sure you know which car is right for you before you begin using this quick guide to leasing. | February 18, 2011

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If you're someone who likes the idea of driving a new car every few years, leasing could be the best solution for you. Edmunds.com has an in-depth 10-step guide to leasing a car, but in this article, we're condensing the leasing process into five essentials for people on the go. You can also print out this article and use it as a checklist to keep you on track.

This quick guide tackles the leasing process specifically and begins with a few assumptions. By now you should have already researched and found the car you want. You should also call your insurance carrier to get a price quote on the car you might lease. People like leasing because it allows them to get into nicer vehicles, but overlooking the cost of insurance might end up pushing them beyond the limits of their budgets. One final preparatory note: Because an online transaction is the fastest way to get a great deal, the steps here assume that you will go through the Internet department as part of the process. If you're new to leasing, take a quick look at the Edmunds leasing glossary.

1. Check for Lease Specials
The Edmunds incentives page is frequently updated with all the current lease deals. You can also check out featured leasing deals of the month. Automakers typically advertise deals that feature low monthly payments or zero cash at signing. In some cases, they may offer both. The ads use a few common phrases with which you will need to be familiar.

Though the low monthly payment may seem more appealing, it is usually a better move to get a deal with no down payment. Down payments — also known as cap reductions — should be kept to a minimum in leasing. If you happen to get into an accident soon after leasing the car, gap insurance (which covers what traditional car insurance doesn't) will take care of the major expenses, but your down payment will be lost. If you absolutely need the monthly payment to be in a certain range that fits your budget, it's a better idea to take the money you would use for the down payment and put it into a separate bank account. You then use it to help make the monthly payments.

2. Locate Your Vehicle and Compare Quotes
After you know what to expect in terms of payments, the next step is to locate the vehicle and request a quote. Use our New Car Inventory tool to locate the model and color you are looking for. If you plan on taking advantage of a lease special, make sure that the dealership has the specific model that is being advertised.

Once you've narrowed the cars down to a few candidates, call or e-mail the Internet manager to verify that the car has the options you want. Ask about any additional fees that may not have been listed in the advertisement. Be sure to mention any current lease specials to your dealer contacts and verify whether they will give you that price. If the dealer offers you a "better deal," pay close attention to the specifics of the pricing. It might mean more money out of your pocket.

You should easily be able to get four to six dealer quotes in an hour. Not every car described will match your ideal configuration, so you may have to be flexible on options and color in order to get the best deal. If the car you've chosen does not have a lease special with an advertised monthly payment, there is a method you can use to calculate your own lease payment. You may need to ask the dealership for a few pieces of information to complete the formula, but once you do, it will give you a better idea of whether you are being offered a fair price. Alternatively, get multiple quotes and compare them to shake out the lowest price.

3. Review the Lease Agreement
Arrange to have the vehicle delivered to your home or workplace, whichever is more convenient for you. In the meantime, call your insurance company and let your agent or customer-service representative know that you'll need coverage for your new car. Once the car arrives, take a close look at the lease agreement. Make sure that your personal information is correct. You don't have to read the whole thing top to bottom, but pay attention to important lease-specific details such as:

  • The length of the lease in months (we recommend 36 months).
  • The amount due at signing (we recommend no money down).
  • The number of miles allowed per year (usually 12,000).
  • The monthly payment, including taxes and all fees.
  • The inclusion of gap insurance in the contract.

4. Take Delivery
After you have signed the paperwork, have the salesperson walk around the vehicle with you. Make sure there are no scratches, dents or dings. Make sure you get an owner's manual, a spare key and a copy of the lease agreement. Most dealers throw in a full tank of gas and a car detailing, so ensure that's been done. Now is also the time to ask any last-minute questions you may have about the vehicle. Ask the salesperson anything you want to know, from pairing your phone with the vehicle via Bluetooth to operating the navigation system.

5. Managing Your Lease
Now that you've officially leased the vehicle, there are a few things to keep in mind. It is important to have the maintenance performed at scheduled intervals. Consult the owner's manual for more information or search for your car in the Edmunds maintenance guide. Make sure that you stay within your mileage limits to avoid extra fees at the end of your term. The typical range is between 10,000 and 12,000 miles per year.

When you are nearing the end of your lease term, you will have to make a decision on the future of your vehicle. There are a few options here. The most common is to turn in the car and begin another lease. If you have fallen in love with your leased car and want to keep it, you can purchase it for the residual amount stated in your contract. In some cases, the buyout price can be negotiated to a lower amount. And in some cases, you can even continue the lease on a month-to-month basis while you figure out what you want to do.

Comments

  • christian35 christian35 Posts:

    In simple words, if you lease a vehicle then you basically pay for the portion of the use of that vehicle. When you buy a car , then you will pay for the entire cost of the vehicle, regardless of the actual use. Buying a car can provide a big asset , however, uness you can afford to pay cash for the particular car of your dreams, then you will pay a higher monthly payment then you would on a lease, and in most cases , after the five or six year term of the financing, you can end up with an old car that is only worth a few thousand dollars... SHopping can be made easy by using a Auto Broker to do the comparasing or you ,autotrader.com or NewCarSuperstore.Com are the large ones in LA , but there are manny more that are helpful Good luck shopping, Chris

  • omly omly Posts:

    I find leasing an intriguing idea because of the fact that you are only making payments on about half the price of the car, as opposed to the whole thing, as mentioned above, which makes the payments far more affordable in most cases. However, for some reason I feel like a lot of people are discouraged from leasing and for me I cannot see the value of putting that much money (what you paid into it during your lease) into a car and then just returning it at the end of the lease (though it is very nice to have the option in case your situations change) But am I looking at this the wrong way? It seems like everyone keeps saying that leasing is only good for someone who wants a new car every few years - but I don't necessarily, I want affordable payments for a great car that is safe and doesn't come with the hassle of possible mechanical issues that aren't covered by warranty that you WILL find in used vehicles. Is this the wrong way to be looking at a lease? Should I really be trying to buy a vehicle? I can do it but I just really feel that not only is leasing more affordable as far as payments go, but allows for flexibility and allows me to not have to spend all of my money on a car to get a really good car, just about half that....

  • luis35_ luis35_ Posts:

    Ive never leased a car so the following is what i just heard from friends. Staying under the mileage cap even for you average driver is difficult. All my friends that have done this always go over the miles. At times they debate geez i need to go to the store but thats 10 miles round trip. I also heard when you go to turn in the car the dealer will nickle and dime you. Small scratch here i think i see something over there etc etc. I think this is why so many people are turned off. By the time you go to turn the car your kind of stuck with it.

  • dweiner51 dweiner51 Posts:

    I thought the buy-out price was always non-negotiable.

  • david103002 david103002 Posts:

    Here's the reality of car buying as I understand. If you finance a vehicle for 72 months so that you can get the lowest payment possible and then trade it before you pay for it, aren't you really just "renting" the car anyway? As long as you make your payments, you get to drive it. If you think you "own" the car, try not making any payments and see what happens. They come and take your car away! The only time I would buy a car is when I can pay cash. Then you have a depreciating asset that eventually will cost you money not only in repairs but also tie up whatever money you paid for it.

  • blond511 blond511 Posts:

    i bought a nice jaguar and in 2010 then I lost my job and then almost my home. . Now in 2013 I am coming back to "normal" and am interested in leasing a jaguar. I know this is the way to get a nice new car but I am reading up on all the leasing ideas. I am reading everything I can on leasing. I don't want to buy, too expensive, I don't drive much so that mileage limitation would be good. some sites say don't pay anything down. I could get a cheaper car, but my heart is set on another jaguar. any comments would be appreciated.

  • needacar24 needacar24 Posts:

    Hi, I am trying to get a new car. I am in love with the new chevrolet Impala. it cost more than i have. I am whiling to either lease it or buy it but i do not have any idea on what would be the best choice. it cost, according to www.chevrolet.com, $32,885 and I only have 16.000 I need help please!

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