Hey, Hackr’s!
I hope all of you are safe and healthy during these uncertain times.
Sometimes, leasing a car can get complicated with all the lingo, terms, and conditions involved through the various automakers. I composed a list of information you should know, as well as, common mistakes and misconceptions. They are not in any specific order of importance. Hopefully, this will provide some clarity and relief.
If you should ever have any questions, please feel free to privately message me. Follow me on my Instagram page - @leasingbysam - to see the latest updates, news, and deals.
Let our journey begin -
DISPOSITION FEE:
A disposition fee is a flat fee charged by most (99.9%) car lessors payable at the end of the vehicle lease. The disposition fee is specified in the lease agreement.
Unfortunately, their is no way to waive this charge. The ONLY way to waive this fee is by leasing the same brand car after your lease ends.
BANK FEE (Acquisition Fee):
A car lease acquisition cost is a fee charged by the lessor to set up the lease. It’s sometimes called a lease inception fee, or administrative charge. The acquisition fee will range from a few hundred dollars to as much a $1,000 for a higher-end luxury car.
Again, this is a standard charge when getting a new lease, and must be paid on every entry of a newly leased vehicle. There is no way of actually waiving it, EVEN IF YOU ARE STICKING TO THE SAME BRAND AS YOUR OLD LEASE. If your broker or dealer tells you that it is “waived” it just means that they rolled it into the monthly payments of the new car.
"$0 DOWN! $0 DUE AT SIGNING!":
This topic has been brought up multiple times on this forum. Nonetheless, I see time after time people still falling for this poorly worded term. What $0 DOWN! $0 DUE AT SIGNING! really means is that you are not paying anything extra besides the basic inceptions of when you get a lease. – which is the 1st month, bank fee, and motor vehicle. These are the bare bones of what you need to pay when acquiring a new lease. Any extra monies or equities you put upfront besides the “basic inceptions” will reduce your monthly.
Please be advised that you are allowed to roll in the “basic inceptions” into the monthly payment of the lease, in order to put down even less money.
Important Tip: It is not advisable to put down thousands of dollars when leasing a car, even though it will bring down the monthly payment. In the scenario that the car gets totaled, the insurance company will not pay out the money you put down at signing.
MILEAGE TERM:
It’s common for leasing contracts to have annual mileage limits of 10,000 to 15,000 miles a year. If you exceed those limits, depending on the automaker, you could be charged up to 30 cents per over-the-limit mile at the end of the lease.
Be sure to clarify in advance with your dealer or broker what the standard mileage of the car you are leasing. Some brands start as low 5,000 miles a year. You are able to purchase more mileage before the lease (not mid-lease) starts.
Important Tip: Yes! It is always cheaper to pre-pay the miles in advance then going over the miles and paying the over mileage after the lease ends.
Also note, a ton of brands will allow pre-paid high mileage leases. 40,000 - 60,000 miles a year, for those individuals who drive a lot.
MSRP VS INCENTIVES:
Commonly, individuals will approach me asking me the following - “why is the lease so expensive on such and such a car? The MSRP of the car is not so much.” This is a major misconception. Every car has certain incentives and rebates. Even though the MSRP is low it could be that the banks are not offering large incentives as they would give on a more expensive MSRP.
Part of the lease price is determined by how far away you are purchasing the car from MSRP.
LEASE CONQUEST:
Also known as “competitive conquest” or “competitive owner” offers, conquest programs are offered to both lessees or owners of competing brands. Since automakers tend to see more loyalty from their lease customers, the most common conquest incentives are offered to lessees of other brands.
Important Tip: In the scenario you do not qualify for the lease conquest, you may apply a cosigner that has the qualifying conquest to help your monthly payment come out cheaper.
LEASE LOYALTY:
Loyalty incentives are given to car buyers who already own, or have owned within 30 days, the same brand of vehicle in the past. Manufacturers want to reward those who continue buying from them - in the form of a rebate usually amounting to $500 or more.
Important Tip: In the scenario you do not qualify for the lease loyalty, you may apply a cosigner that has the qualifying loyalty to help your monthly payment come out cheaper.
COLLEGE GRAD / 1st RESPONDER / MILITARY/ COSTCO:
Automakers will discount your lease if you fall into the above category predicaments.
ENDING A LEASE EARLY:
This is probably the most common question I get. “Sam, can I end my lease? I am willing to pay a termination fee.” Unfortunately, their is no way to opt-out of a lease without being penalized for the remaining payments owed on the lease.
Any broker or dealer who tells you that they will be eating the payments on your current lease are most likely rolling your remaining debt into the new car if obtaining a new lease. Therefore, in theory, you would be paying for 2 cars simultaneously.
Note: The only way to end the lease early is if the bank, (aka) your funding institution, is offering a pull-ahead program on the condition you purchase a new lease through them. Dependent on the brand of car, pull-ahead can range from 3-9 months.
If you made it until the end of this article, I appreciate your time. Once again any questions or concerns, feel free to privately message me.
Make it a great day!
