There are several reasons that you might be looking for a car that costs you less than $100 per month. Maybe your budget is incredibly tight, or you just need a low-cost commuter car. With $100 to spend per month, buying a car is probably not possible – unless you can find a reliable used car for less than $5,000 and you have excellent credit.
Leasing is an option, but can you find a car to lease for less than $100 per month? The answer is maybe, but it takes patience, homework, and a top-tier credit score.
Why Is It So Difficult?
To understand why finding a lease with sub-$100 payments is so difficult, a reminder of how leasing works is in order: When you purchase a car, you’re responsible for the entire cost of the car, whether you pay it all at once or finance it over a number of months. With a lease, you only pay for the depreciation that occurs while you have the car, plus interest and fees. That cost is broken down into monthly payments and a lump sum due when you take delivery of the car.
That means you’ll have to find a car that depreciates less than $3,600 over a three-year term, has a low interest rate in the lease terms (called the money factor in leasing), and has very low fees to create a lease with average payments of $100 per month. There are a few ways that the payment can be kept to a minimum, but the $100 mark is still tough to hit.
Ways to Do It
First, if you lease a car that depreciates very slowly and therefore has a very high value when the lease ends (called residual value), payments can be kept low. An example is the 2017 Honda Fit, which was recently offered with a $139-per-month lease. That’s still a long way from $100 per month, so other factors would have to come into play to lower it even more.
If you can negotiate a great price on the car, the amount that you'll have to pay between its cost and residual value would be lower, and in turn, the monthly payments would be smaller.
You can also pay a substantial amount at signing. An example is a recent lease deal on the 2017 GMC Terrain. The monthly payments are just $149 on the two-year lease, but you have to pay $3,259 at signing. Trading in a car that has substantial value effectively increases your down payment and can lower your monthly lease cost, just like paying cash at lease signing does.
Finally, you can look for a great lease deal from a manufacturer or local dealer. When a car is selling slowly, or dealers simply need to make space on their lots, they often subsidize the cost of leasing by artificially increasing the residual value. That lowers monthly payments. In rare cases, these lease deals include payments of less than $100 per month.
In order to meet regulatory requirements in some states, manufacturers must sell a certain number of zero emissions vehicles. This has led to some incredible lease deals, such as the $69-per-month lease offered last year on the Fiat 500e battery-electric vehicle.
Make Sure You Get a Good Deal
In order to compare one lease to another, you’ll want to look at the total cost of the deal. Take the monthly payment amount and multiply it by one less than the number of months in the lease term. Then add that total to the amount that you have to pay at signing to find the ultimate cost of the lease.
Lease deals for $100 or less per month are not normal, so you need to remain vigilant to find them. In addition to following our expert staff’s picks of the best lease deals each month, you’ll want to watch the deals offered by local dealers.