How to Lease a Car

If you're in the market for a car but don't have the money to buy one up-front, leasing might be your best option. Lease terms are usually available anywhere from two to six years. When evaluating a lease option, consider the total initial payment, amount of monthly payments, the number of months included in your lease and the possible additional charges at the end of your lease.

Leasing a vehicle every two to three years is more expensive than buying one, but the option lets consumers drive vehicles they could never afford to buy. Your down payment and monthly charges will be less than purchasing the same vehicle outright. To secure a lease, all you'll likely have to put down is the first month's payment and a security deposit.

You can access the Bankrate car lease calculator to determine whether leasing makes more sense than buying for you based on your income and how much you can spend on monthly payments.

Securing a lease is all about credit score. So-so credit means a bigger down payment and higher monthly payments. If you have poor credit, you likely will not be able to secure a lease at all.

Do your research to shop for the best lease deal. Make dealers compete for your business.

1. Check out new car dealers, leasing agents and brokers, as well as banks and credit unions for consumer leases.

2. Compare costs for identical vehicles. A lease with low monthly payments and a large down payment may cost more overall than a lease with higher monthly payments and no money down. Do the math and consider how much you will be paying outright versus over the course of the lease term.

3. There are several websites that can find the best deals for you. Check out CarLeasingSecrets.com and LeaseTrader.com to get you started.

Cost is negotiable in a lease just as it is when you buy a car. The lower the total price, the lower your lease payments will be.

1. Choose a model that has a higher resale value if you want to keep costs down.

2. Consult a used-car pricing guide to see how well the car's value has held up historically.

3. Ask the loan department of your bank or leasing company to compare new vehicles' residual values. You can also access Automotive Lease Guide's "Residual Percentage Guide" where you'll find charts that estimate how much vehicles are worth after a period of months.

Before signing a lease, read the fine print and make sure you understand everything you are signing for.

1. Be aware of the capitalized cost, interest rate, up-front fees and taxes, credit provided for used-car trade-ins, the car's residual value and the amount to be depreciated.

2. Make note of the acquisition fee, typically ranging from $250 to $450. The disposition fee will add another $300 to $400 as well.

3. Know whether or not the contract has a purchase-option fee that allows you to buy the car at the end of the lease for a predetermined price.

4. Look for a description in the contract of what constitutes "excessive wear and tear," as well as how much you will be charged for this at the end of the term.

5. Make sure you are offered "gap insurance," or guaranteed asset protection insurance, which covers the remainder of your lease payments if the car is stolen or totaled. 

6. Determine whether you can add aftermarket accessories to your vehicle (i.e. vinyl tops, exterior trim, trailer hitches, etc.), as most lease agreements prohibit such.

The best way to drive a late model of a vehicle at the lowest price is to take over someone else's existing car lease. The reason for this is that older leases were likely taken out when car manufacturers were offering money-losing lease deals and low monthly payments. 

By taking over one of these low-lease deals, you will pay no money down, no up-front sales tax and only have to pay a nominal transfer fee.

Online companies like SwapALease.com act as match-makers for people who want out of a lease and those who want to take over one.