2. Pay for the entire lease up front and save some cash.
Some lenders will cut you a break on the lease interest costs if you pay for the whole lease up front. This option is often called a one-pay or single-pay lease.
An example of how this can work: Imagine you planned to lease a car with no money out of pocket, and the 36-month lease payment worked out to $350 per month with the normally calculated interest rate. With these terms, your total cost over three years would be $12,600. If you paid your entire lease up front and the reduction in interest shaved $25 from each payment, you would save $900. Your lump-sum payment would be $11,700.
Besides saving money in interest costs, a single-pay lease might help you if you would not have otherwise qualified for leasing. A shopper who is new to the country with no credit history could find it hard to get a deal done. Offering to pay the whole lease balance up front will almost certainly get you approved.
This strategy can also prove helpful if you intend to pay cash to buy a new vehicle. Rather than making a larger cash payment to purchase the car, consider a single-pay lease and then buy the car when the lease ends. Doing this can give you a measure of flexibility: You no longer need to worry about a huge depreciation hit if you fall out of love with the vehicle or if you have a situation that forces you to leave the lease early. It also lets you hold on to some of your money longer.
Before choosing a one-pay lease, contact the lender with whom you're planning to lease and get answers to these questions:
- How much will I save by paying for the whole lease up front?
- If my vehicle is totaled early on, will I get a refund for the months I paid for but didn't use?
- What happens to the unused payments if I decide to trade out of this lease early?
Once you've gotten answers, you can decide if a single-pay lease is something that might work for you.
3. Continue your lease month to month until you are ready to get your next car.
Some people panic as the end of their lease approaches because they don't have a new car lined up. They're worried about making a bad vehicle choice as the clock is ticking.
It doesn't have to be this way. Most leasing companies are happy to extend an expiring lease, which can give you some breathing room and time to make the right vehicle choice.
Some lenders will allow for a simple month-to-month extension. Other companies may want you to sign up for extensions for predetermined periods of time, such as three or six months. Most lenders will cap your extension at 12 months. Your payments will stay the same, and your allotted miles per month won't change.
A lease extension is pretty easy to get. Usually, a single phone call to your lender is all it takes to stretch out your term. And if you don't need that much time, ask for a 10-day extension. Most lenders will be happy to oblige.
4. Exit a lease early with no penalties.
Did you know that if you're leasing a car and want to get out early, you might be able to let somebody else take over the lease? It's true. There are websites that will help you with these takeovers, which can save you early termination fees or penalties.
It is possible to transfer about 80 percent of leases with no strings attached. For a fee, websites such as Swapalease and rival LeaseTrader.com will post your vehicle listing, connecting you with potential buyers. Agents from these companies will then walk you and the buyer through the paperwork needed to transfer the lease over.
Note that even after you transfer the lease, a few leasing companies require you, as the original leaseholder, to retain some "post-transfer liability" for the vehicle. Your name would remain on the contract, possibly leaving you financially responsible for unpaid balances, such as excess mileage charges or lease-end fees if the person taking over the lease exceeds the allocated mileage or beats up the vehicle.
If you want more information about transferring a lease, read "How to Get Out of Your Lease the Cheap and Easy Way."
5. Customize the mileage to suit your needs.
You may have heard that leasing isn't good for people who drive a lot of miles. The truth is that leasing can be fantastic for people who pile on the miles. It all depends on how the lease is set up.
Depending on the brand being leased, it may be possible to get a high-mileage lease, which permits as many as 33,000 miles per year rather than the standard 12,000.
It isn't difficult to get one. Simply request more miles when you initiate your lease. These extra miles won't come free, and they will increase your payment. But this uptick in payment may be worth it if you aren't sure you want to be committed to the car long term. Another advantage for you, as a high-mileage driver, is that payments may be lower than those in a standard purchase even with the charge for extra miles factored in.
Keep in mind that if you don't wind up driving all the miles you bought, you won't be reimbursed for them.
Finally, here are two bonus strategies:
1. Consider starting your lease with no money out of pocket, especially if your lease has a very low money factor. Unlike a purchase with a traditional interest rate, making a down payment on a lease isn't always the best idea.
2. If you think you might want to buy the car or trade out of your lease early, see if you can bypass paying the standard acquisition charge by paying a slightly higher money factor. This approach may save you a few hundred bucks if you terminate your lease contract early.