Quick Guide to Leasing a New Car
All You Need To Know in 5 Easy Steps
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.