Best Lease Deals

What Are the Best Lease Deals This December?

There’s an affordable way to get a vehicle with all the latest advanced technology, performance, and safety systems before the holidays. It’s car leasing, and it’s one way to have a new car about as often as people get a new smartphone. It’s more like renting a car than buying one, and you simply return the vehicle to the dealer at the end of the lease. Though leasing isn’t for everyone, it can be an attractive and relatively inexpensive path to a new car for the right consumer.

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Last Updated: Dec 07, 2018

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Leasing a car can be even more attractive if you are able to take advantage of a manufacturer-subsidized lease deal. A lease deal can lower the monthly payment, the amount you have to pay when you start the lease, or both. Carmakers offer lease deals to quickly sell vehicles that are due to be replaced with updated models and those that aren’t meeting sales expectations.

According to credit reporting bureau Experian, around 30 percent of new cars driving off dealership lots are leased rather than purchased by consumers. In the past, leasing was reserved for business customers and luxury-car clients. Today, you can lease almost any vehicle you can buy, including cars, pickups, SUVs, and minivans.

With leasing, you only pay for the depreciation that is expected to occur during the term of the contract, plus interest and fees. That differs from buying, where you have to pay the entire cost of the car and usually have to take out a car loan to do so. Monthly lease payments are often significantly lower than car payments.

The concept of leasing is simple, but the process can be complicated. You only pay the difference between the initial price of the vehicle (its capitalized cost) and its expected value at the end of the lease (its residual value), plus interest and fees. Because the process can be complex, you’ll want to arm yourself with information before you head to the dealership seeking to lease a new vehicle.

The first step, of course, is to find the right vehicle to lease. Our new car rankings and reviews will help you find the best vehicle to meet your needs and budget. You’ll then need to negotiate your lease and sign the paperwork. Our consumer advice articles can help you every step of the way, including deciding whether to buy or lease, avoiding costly leasing mistakes, and getting the right auto insurance. Our new car leasing guide is an in-depth resource on how the process works.

With holiday trips and inclement weather on the horizon, December is a great time to get behind the wheel of a new car. For automakers, it’s the time to roll out generous incentives to help hit sales goals and move the last of the 2018 models off of the lots.

Shoppers looking for low monthly payments can find several models with payments well below $200 this December, including the 2018 Chevrolet Cruze, 2019 Kia Forte, and 2019 Volkswagen Jetta. In some parts of the country, you’ll find capable SUVs, such as the 2019 Jeep Cherokee and 2018 Toyota RAV4 with payments below $200. The monthly payments on this month’s 2018 Honda CR-V lease deal are a little higher than some others, but there's a small amount due at signing so you can save some of your cash for holiday shopping.

With rising interest rates, leasing will likely be more expensive in 2019 than it has been in 2018. Changes in interest rates don’t just affect car buyers, they also have an effect on lease money factors, which are the leasing equivalents of interest rates. We'll talk more about how to compare a money factor to an interest rate in a moment, but for now, note that rising interest rates will raise lease payments.

Many lease offers are only available in specific areas of the country and are limited to certain models with specific trim levels and option packages. You’ll likely have to find a vehicle that is eligible for the lease offer in a dealer inventory, without the option of special ordering one from the factory. Unlike most leases, prices and payments with automaker-subsidized lease deals are fixed, with little room to negotiate anything other than maybe some dealer fees. The best lease deals are only offered to consumers with excellent credit scores.

How Do You Lease a Car?

Leasing a car is similar to buying a car in many ways. You'll want to do the research to see whether the vehicle you choose fits your needs and budget. Our new car rankings will help you find the right car to match with your great lease deal. A deal isn’t a great deal unless you find a vehicle that will give you years of trouble-free, enjoyable driving.

There are many differences between buying and leasing, however. The biggest is that when you lease a car, you don’t actually own it. You’re essentially renting it from the leasing company that holds its title. Unlike a car that you own, a leased car will come with a strict mileage limit. Exceeding the mileage cap will cost you a fee for every mile you drive. Depending on the type of car you lease, excess mileage fees will range from about 15 to 50 cents per mile. That can quickly add up to an unwelcome surprise at the end of your lease. Before you consider leasing, you'll want to have a reasonable estimate of how many miles you expect to drive per year.

Some lease disclosures will list an annual mileage limit. The lessor won’t check the mileage each year. Instead, they'll check at the end of the lease to ensure that you haven't gone over the total miles allowed. For example, if your three-year lease allows 12,000 miles per year, you'll get dinged if the odometer shows more than 36,000 miles at the end of the contract.

Unless you are getting an automaker-subsidized lease deal, you will want to negotiate the price of the vehicle (its capitalized cost), the money factor, the mileage cap, and the length of the contract. If you're OK with the restrictive terms of a special lease deal, the potential savings can be huge compared to a typical lease.

When you lease a car, you pay for the amount of depreciation that is expected to occur during the lease term. When the lease is up, you return the vehicle to the dealer you originated the contract with. In some cases, you can return the vehicle to another franchised new-car dealer that carries the same brand of vehicle. The car will be checked out by the dealer, and fees will be assessed for excess wear or mileage. If you paid a security deposit at the beginning of the lease, those costs will be deducted from it.

To find the amount of depreciation you'll be paying for, you subtract the expected value of the vehicle at the end of the lease (called its "residual value") from the price of the car, or its capitalized cost. The residual value is an outside expert’s opinion of what the vehicle will be worth a few years down the road. It is typically not negotiable. The depreciation, plus interest and fees, is divided between an initial payment due when you sign the lease and a series of equal monthly payments.

Here’s an example: You’ve found the perfect full-size pickup, with an MSRP of $45,000. At the end of three years, it is expected to be worth $28,000, which is its residual value. To lease the vehicle, you’ll have to pay $17,000, plus interest and fees. If the lease is structured so that you pay $2,000 at signing, the remaining $15,000 (plus interest and fees, of course) will be spread across a series of equal monthly payments.

As we mentioned earlier, with leasing, the interest rate you pay on the depreciation is called the money factor. You can multiply it by 2,400 to compare it to an interest rate, or if you have an interest rate, you can convert it to a money factor by dividing it by 2,400. For example, if the lease documents show a money factor of .0025, you can multiply it by 2,400 and see that it is equivalent to a 6 percent interest rate.

Another significant cost in both car buying and leasing is sales tax. Depending on where you live, leasing customers can save big when it comes to sales tax. Though you’ll want to talk to a tax professional who knows your specific financial situation to find out the rules in your area, in many places, leasing customers only have to pay tax on the amount due at signing and their monthly payments. When you purchase a car, you have to pay tax on the whole cost of the car, minus any trade-in value in most states.

What Else Do You Need to Know About Leasing?

If you like to customize your vehicle with earth-shaking audio gear, fancy tires and wheels, or off-road gear, leasing is probably not your best option. While you might think those expensive add-ons build value, leased cars need to be returned to the dealer at the end of the contract just as they left the showroom, less an acceptable level of wear and tear. You will have to pay to have any customized equipment removed or be prepared to pay the dealer to do so.

Leasing companies demand that you maintain leased vehicles precisely as the owners manual says you should. You’ll need to retain every receipt for service as proof that all scheduled maintenance has been performed. Some leases will cover periodic maintenance during the course of the contract, but most will require you to have it performed at your own expense.

It doesn't matter how many lease contracts you have signed, it is critical to read the paperwork. Every lease is different, and you'll want to make sure that the deal you agreed to matches the paperwork. Look closely at the capitalized cost, the length of the lease, the monthly payment, and the mileage cap, so there aren’t any surprises after you sign. Sometimes costly add-ons and fees find their way into the final paperwork. It’s important you understand and agree to everything in the contract before it gets your signature. If there are any errors or blank spaces in the paperwork, make sure they are corrected or completed before you sign. If you get pressure to sign a document with errors or with entries you don’t understand, you should consider it a red flag and step back from the deal.

With most lease contracts, you will be required to carry gap insurance to protect the leasing company if your vehicle is stolen or totaled. Even if the agreement doesn't require it, gap insurance is still good for lease customers to have. If your car is deemed a total loss in an accident or it gets stolen, your auto insurance company will only pay the leasing company the market value of the vehicle. Without gap insurance, you would be liable to pay for the difference in the lease contract’s buyout cost and the market value paid by the insurer, which could be substantial. Though the dealer might pressure you to buy the coverage from them, you should comparison shop with your auto insurance company and financial institution before you make a decision on where to buy. Not every gap insurance policy is the same, so be sure to compare coverages between your different options.

You can learn more about the coverage by reading our article on gap insurance. Note that any auto insurance coverage required by your leasing company is likely different than the coverage required by states. Explore our auto insurance center to learn more about the type and level of coverages you should buy.

A top benefit of leasing is your vehicle will likely be covered by a bumper-to-bumper and powertrain warranty for the length of the lease contract. If something breaks, it will be up to the automaker to fix it in most cases, and you should have no out-of-pocket expense. You'll want to budget, though, for costs such as insurance, registration, taxes, and fuel.

At lease end, you can take the vehicle back to the dealership you got it from or to another of the same automaker’s franchised new-car dealerships if it’s allowed by the contract. That’s a great benefit if you have moved since you signed the lease. The dealer will inspect the car and assess any damage, total up any excess mileage costs, and collect lease-end fees. Many contracts have a disposition fee which goes toward refurbishing the vehicle for resale. In some cases, the fee is waived if you opt to buy the car.

Before you decide you want to buy the vehicle at lease end, do a survey of the market to see what similar models are selling for. If they're selling for a lot more than the buyout cost of your car, you can sell your leased car, pay off the lease, and have a few dollars in your pocket. If other vehicles are selling for significantly less than your lease buyout cost, return yours to the dealer and buy one of the others instead.

Leasing and Credit

Having a good credit score is required with leasing, and having great credit allows you to get the best deals. Automakers generally offer lease deals only to consumers with top-notch credit histories. In addition, you'll have to show a stable work history, which helps ensure the leasing company that you will make all of your payments throughout the term of the lease. A car lease is a contract, and you can face serious financial consequences if you need to get out of a lease early.

Considering the importance of a good credit score, it’s a good idea to check your credit score and the credit reports behind them well in advance of your car-leasing adventure. It can take some time to get errors corrected and improve your score. The last place you want to find out you have problems with your credit is in the dealership’s financing office, where you may not feel you have a choice but to take a lousy lease or financing offer.

How Do I Know If It Is a Deal?

Seeing a lease advertised is no guarantee that it is a great deal. While you need to find a lease that fits into your monthly budget, focusing on the payment can lead to a costly leasing mistake that can haunt you for the entire length of the lease. Instead, you need to look at the entire cost of the contract, including the total of all the payments plus the amount due at signing.

Thankfully, doing the math to determine a lease’s total cost is about as easy as overindulging on holiday treats. A side benefit is that comparing the total cost of different leases is a great way to make sure you’re getting the best deal. It's essential to do the math yourself and don't rely on the salesperson so that you understand all of the numbers in the offer. They'll want to keep you laser-focused on the monthly payment, while the total cost is the number you want to be looking at. Leaving the math to them can also allow for costly add-ons to find their way into the deal.

Here's the simple way to determine a lease's total cost: Multiply the monthly payment amount by one less than the number of months in the lease contract, then add the amount you have to pay at signing, including fees. You subtract one from the number of payments because the first month's payment is generally included in the amount due at signing.

Here’s an example using two of the lease deals available this December.

In the Northeast, Toyota is offering a $189 per month lease for three years with $2,999 due at signing on the 2018 Toyota RAV4. There’s also a lease deal on the 2018 Honda CR-V, with monthly payments of $229 for three years and $1,999 due at signing. The CR-V costs $1,000 less up front, but which is the better long-term deal?

To determine the cost of the RAV4 lease, you multiply the $189 payment by 35 (remember, one less than the number of months in the contract), then add $2,999. The total cost of the RAV4 deal is $9,614.

The cost of the CR-V lease is $229 multiplied by 35, plus $1,999, which totals $10,014. Despite costing much more up front, the RAV4’s lower monthly payments make its lease cost $400 less over its three-year term. You’ll want to run the numbers for every lease offer you are considering because you can’t assume that a lease with lower monthly payments or less due at signing will always be the cheapest option.

Though leasing is usually less expensive than buying in the short term, you’ll also have a car payment every month you have a leased car. With buying, your car payments stop once the loan is paid off. If you’re unsure which option is best for you, take a look at our article on leasing versus buying. Before you commit to leasing solely on monthly cost, take a look at our car deals page. Some generous car deals with zero percent interest rates or massive amounts of cash back can narrow the price gap between buying and leasing.

If your primary goal with a lease is to keep your payment low, while getting a reliable car with warranty coverage, you should also consider purchasing a certified pre-owned vehicle (CPO car). Certified used cars have low miles, no accident, and have been meticulously inspected so they can be offered with warranty coverage. CPO cars typically have higher prices than similar non-certified vehicles because of the warranty coverage and other perks. Many automakers offer financing deals on their CPO cars, and you'll find them listed on our used car deals page.

If you didn’t see your dream car in the list of vehicles above, look at our Acura, BMW, Cadillac, Mercedes-Benz, Porsche, Audi, Toyota, Nissan, Ford, Honda, Chevrolet, Hyundai, Kia, Mazda, Jeep, Dodge, Ram, Buick, GMC, Subaru, Lexus, and Volkswagen deals pages to see brand-specific lease specials.

While we strive to keep the deals listed here up to date, these lease offers can change and may not be available in all areas. The best source of information on current lease deals is your local dealer. Use the link next to the vehicle you’re interested in to contact a dealership near you.

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