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Leasing a car can be expensive. Read on to learn about some of the lesser-known costs involved.
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If you rely on a car to work and just plain function, you’re in good company. Recent research from The Ascent on vehicle ownership found that 91.5% of U.S. households had at least one car in 2020.
But just because you need a car doesn’t mean you have to buy one. You could look at leasing a car instead. But if you’re going to go this route, be mindful of these little-known costs you might encounter in the process.
1. Fees for going over your mileage
When you lease a car, you’re limited to a certain number of miles. That limit may be 10,000 miles a year, 12,000 miles a year, or more. But if you go over your mileage limit, you’ll pay up big time.
Consumer Reports says you should expect to pay up to $0.50 per mile for each mile that exceeds the limit your lease calls for. So if you end up driving 500 miles above your lease, it’ll cost you $250 if you’re charged $0.50 per extra mile.
2. Fees for excessive wear and tear
It’s common for a vehicle to show signs of wear and tear after it’s been driven for several years. But if your leased car shows signs of what’s deemed to be excessive wear and tear, you’ll be charged accordingly. And unfortunately, excessive wear and tear can be somewhat subjective, so that something you’d consider standard may not be what your dealership considers standard.
3. Fees for breaking your lease early
One benefit to leasing a car rather than owning one is not being stuck with the same vehicle forever. If you try out a given car and don’t love it, you can replace it once your lease comes to an end.
If you can’t manage to stick out the entire term of your lease, you’ll likely face a penalty for terminating it early. And the specifics here will depend on your contract.
But let’s say you lease a smaller car for three years, and then one year into that lease, oops — you’re having another baby you weren’t planning for. It may be that your leased vehicle isn’t large enough to fit your family once that new addition arrives. Unfortunately, that’s your problem, whereas you can always sell a car you own that no longer meets your needs.
Should you lease a car or buy one?
There are certain benefits to leasing a car you might end up appreciating. For one thing, you may be looking at a lower down payment on a lease than a car purchase (though not always). And also, you may not have to worry about raiding your savings account for major repairs, since those are usually covered by a three-year, 36,000-mile warranty that covers the full term of your lease.
But if you’re going to lease a car rather than purchase one, make sure to read up on the costs involved. And also, read your lease agreement carefully so there are no unpleasant financial surprises. In fact, it’s a good idea to stick some extra money into your savings after signing your lease so that you have funds to tap if needed to cover the above-mentioned expenses.
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