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When you lease a car, you pay for the vehicle’s depreciation during the course of the lease, plus interest. While leasing gives you the opportunity to drive a car with the latest comfort, safety, and infotainment technologies, it also comes with quite a few fees that you’ll want to know about.

For more on the basics of leasing, check out How Does Leasing a Car Work?

When you ask, “How much does it cost to lease a car?” you’ll want to consider all of the costs, not just the monthly payment and the amount due at signing you see advertised. Some of the fees that you’ll encounter with leasing can be negotiated, while others are set in stone. You will also want to consider the taxes you have to pay up front and with each of your lease payments.

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Here are the lease fees we’ll cover in this guide:

  • Acquisition Fee (Bank Fee)
  • Disposition Fee
  • Registration, Title, License Fees
  • Doc Fee
  • Security Deposit
  • First Month’s Payment
  • Gap Insurance
  • Sales Tax
  • Excise Tax
  • Excess Wear Fees
  • Excess Mileage Fees
  • Early Termination Fee
  • Lease-Swap Fees
  • Buyout Cost


Fees That You’ll Pay at Signing

There are many upfront costs that you will have to pay in addition to your down payment on the day that you pick up your newly leased car. You’ll need to know the complete out-of-pocket cost to ensure that you have enough money on hand to initiate the lease.

Acquisition Fee (Bank Fee): A car lease acquisition cost is a fee charged by the lessor to set up the lease. It’s sometimes called a bank fee, 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. While it may sometimes be negotiable, it’s not common that you can haggle over the cost.

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Although you can’t normally bicker over the fee, know that it’s basically a made-up charge that is, in theory, used to take care of all of the administration and paperwork for the lease. If you take out a car loan, you don’t have to pay such a fee, but it’s common to leasing.

Depending on how your lease contract is structured, you'll either pay the acquisition fee up front or as part of your monthly payments. Note that if it is included in your monthly payment, you'll be paying interest on the charge.

Some dealers mark up the acquisition fee to make a little more money off the new-car transaction. The best way of avoiding the markup is to shop at several dealers and insist that the total drive-off charge they offer is broken down into its individual components. If you see a dealership whose acquisition fee is significantly higher than others, they’re probably marking up the charge.

Registration, Title, and License Fees: In order to drive your newly leased car home, it will need to be registered with the state’s DMV. Different states charge different fees for these services, so be sure that you know what they are in your state so that you can budget appropriately. You might ask why you have to pay a title fee when you never have the title to a leased car. In most contracts, you have to pay for the title that is held by the leasing company.

State-mandated registration, title, and license fees are not negotiable. Any fee that a dealership tries to tack on to handle the paperwork is, however, negotiable.

Doc Fee: A doc, or documentation, fee is another way for a dealer to charge you for preparing the paperwork to process your car lease. Sometimes your doc fee is included in the acquisition fee, while in other cases it’s added onto the top. Though you may not be successful, you should always attempt to negotiate the doc fee. Doc fees can vary greatly, from a couple of hundred to several hundred dollars.

Security Deposit: Some lease contracts require that you put down a security deposit when you start the lease to offset any charges you will have at lease end, such as excess mileage, excess wear, or disposition fees. When they are collected, security deposits are often about the cost of one monthly payment.

A security deposit is not technically a fee, as you’ll get the money back at the end of the lease if you have no lease-end charges that are deducted. However, you will have to budget the cost into your initial lease price.

First Month’s Payment: In addition to any down payment you make, most lease contracts also require you to make the first monthly payment at the time you sign the lease. Depending on the car you choose, the first month's payment can add anywhere from a couple hundred dollars to well over a thousand dollars to the amount of cash you need to bring to the table. Occasionally you’ll find automaker-subsidized lease deals that require neither a down payment nor a first month’s payment at the beginning of the auto lease.

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Gap Insurance Costs: Gap, or guaranteed asset protection, insurance is required by nearly all lease contracts. It protects both the lessor and you in case the car is totaled or stolen during the lease term. Even if the leasing agreement does not require you to have it, buying gap coverage is critically important to make up any difference between your contract obligation and the market value your collision, comprehensive, or any other party’s insurance will pay you.

You can read more about the coverage in our article on gap insurance.

Though you’ll likely be pressured to do so, you don’t have to buy a gap policy from the dealer or leasing company. In fact, the dealership is probably the most expensive place to buy it. Instead, check with your car insurance company and your financial institution to find the best coverage at the best price. Even if you don't have a loan with them, most banks and credit unions can sell you gap coverage.  

Fees That You’ll Pay at the End of the Lease

It's easy to be surprised by the charges you have to pay at the end of the lease. Depending on how you have treated your leased vehicle over the term of the contract, end-of-lease fees can cost you anywhere from zero to thousands of dollars. If you put down a security deposit at the beginning of the lease, it can be applied to most lease-end costs.

Disposition Fee: Lease contracts generally stipulate a disposition fee to be paid to the leasing company at the end of the term to cover the cost of preparing the vehicle for resale or disposing of the car. You have a couple of opportunities to try to negotiate the fee away. First, you can attempt to have it taken out of the contract before you sign, though that’s a bit of a long shot. Second, you can try to reduce or eliminate it by either purchasing your leased vehicle or leasing a new car from the same dealership or brand.

If you’re unsure of whether you can negotiate a fee, be sure that you budget for the expense.

Excess Wear Fees: While you are allowed a certain amount of wear-and-tear during a two- or three-year lease, excessive wear or damage will result in fees being charged at the end of the contract to bring the vehicle back to acceptable condition, as defined by the lessor.

Many leasing firms use a “credit card test” to determine what is and is not acceptable damage. If the flaw can be covered entirely by a standard-sized credit card, they won’t charge you for the wear. If the damage is visible beyond the edges of the card, they’ll charge you to repair it.

Leasing contracts require you to perform all scheduled maintenance during the term of the deal. It is sometimes included with the lease, but you'll have to pay for it yourself in most cases. Be sure to retain all documentation that proves that the work has been completed. In most cases, the service does not have to be performed at the originating dealer, but the work does need to be documented.

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Before the end of your lease, it’s a good idea to prepare the car just as you would if you were getting it ready to sell as a used car. Clean it thoroughly inside and out, wax it so it makes an excellent first impression, and gather all of your paperwork to show that you have performed all of the periodic maintenance required during the lease.

Excess wear fees can also come from any add-ons that you put on the car. You need to return the car just as it left the dealer lot. Otherwise, they can charge you to restore the vehicle to that condition. Even though you might feel that your customizations add value to the car, they’re liabilities when you return the vehicle.

Excess Mileage Fees: Almost every contract has a strict cap on how many miles you can drive during the course of the lease agreement. Exceed that mileage limit, and you'll have to pay the price at the end of the lease for every mile over the cap you drive. Most excess mileage fees run between 15 and 50 cents per mile.

You can limit the chances that you’ll have to pay excess mileage charges by accurately estimating the number of miles you drive per year before you enter a lease. If you drive a ton of miles, leasing may not be the best way to get a car. It might be less costly for you in the long run by taking out a loan and buying a new or certified used car.

If you have a long trip scheduled toward the end of your lease and you are approaching your mileage cap, you may want to compare the cost of the projected excess mileage with the price you would pay to rent a car for the journey.

Early Termination Fee: Leasing a new car creates a legally binding contract. If, for some reason, you need to end your lease early, you'll be subject to an early termination fee. It’s designed to pay the leasing firm for the unpaid amount that you would have funded if you completed the terms of the contract. It declines over the term of the lease. Early in the lease, the early termination cost could be many thousands of dollars.

There are several ways to get out of a lease early, and some are more costly than others. If there’s a way you can avoid early termination fees, you’ll want to pursue that strategy.

Buyout Cost: If you decide to purchase the car at any point in the lease, there will be a lease buyout cost. Not technically a leasing fee, it’s the purchase price of the car if you want to buy it. The buyout cost starts very high at the beginning of the lease and declines over the term of the contract.

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If your leased car hasn’t depreciated to the level of its residual value, you can make a bit of money at lease end by paying the buyout cost and reselling the car yourself at the higher market value.

Lease Swap Fees: If you need to get out of your lease before the end of the contract, one option is a lease swap. Essentially, you transfer your obligation to make monthly car payments to another person who is looking for a good deal on a short-term lease. Companies such as and act as matchmakers between you and consumers looking to acquire your leased vehicle. They charge fees to help you market your lease and complete the necessary paperwork.

Before you initiate a lease swap, check with your leasing company to ensure that it is allowed under the terms of your contract. Sometimes the person assuming your lease takes on total responsibility for the duration of the contract, while in other cases you’re still on the hook for lease payments if they fail to pay them.

Car Lease Taxes

Figuring out the tax you have to pay when you lease a new car can be complicated. Because the amount can be substantial, it is critical that you figure how much you have to pay and when you have to pay it so that you can properly budget.

If you have questions about how much you’ll be taxed, it is best to contact a tax professional rather than relying on the experience of a dealer salesperson, whose main job is to get you to lease the car. A tax professional can look at your complete tax picture and help you plan the best way to pay the lowest tax.

Depending on where you live, leasing a car can trigger different tax consequences. In some states, such as Oregon and New Hampshire, there’s no sales tax at all. You just have to pay for licensing, titling, and registration.

In some places, you'll have to pay sales or excise tax on the amount you put down plus your monthly payments. In others, you'll have to pay sales tax on the entire capitalized cost of the car. Whether you can deduct the amount of your trade-in from the taxed price also depends on where you are located.

Usually, the time that you have to pay the tax is defined by the local taxing authority. In a few places, you'll have the option of paying the tax up front or with your monthly payments. Again, you should talk with your tax advisor to determine which route to take. If you are planning on using your leased vehicle for business use, the way that you can deduct the vehicle use is different than if it is for personal use, so be sure discuss the vehicle’s intended use with a tax professional.

Leasing Basics

Of course, the most significant costs that you'll have to pay when you lease a car are depreciation and interest. Unlike when purchasing a vehicle and paying its full value, you're only responsible for the depreciation that occurs during your lease term, plus interest and fees.

There is more to getting a great lease deal than just finding an offer with low monthly lease payments. You'll want to look for car deals with small down payments, low fees, low money factors (interest rates) and affordable lease payments. Together, these components create low total lease costs. Finding a car with a high residual value, a low capitalized cost, or a significant cap cost reduction helps to minimize the amount of depreciation that you have to pay for with your down payment and monthly lease payments.

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While you can lease a car with bad credit, it’s much more affordable for lessees with excellent credit scores. Long before you elect to lease a new car (or get a loan and purchase a vehicle), you should examine your credit reports to improve your score and correct any errors.

Just because you are leasing a car does not mean that you can’t or shouldn’t negotiate the price of the vehicle. Unless you’re getting a manufacturer-subsidized lease deal, you can and should negotiate the lowest capitalized cost you can. Our guide to negotiating the best car price can help you do that.

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Completing the Deal

Before you sign any lease paperwork, you’ll want to go over the documents with a fine-toothed comb. While simple in concept, leasing is complex when it comes to the details. Check to make sure the numbers match the agreed-upon figures from your negotiation and that no costly add-ons have found their way into the contract.

Never sign documents that are incomplete or incorrect. Insist that any errors or omissions are corrected, as it’s tougher to fix legally binding documents once your signature is on the bottom line and any errors can have significant long-term consequences.

More Shopping Tools From U.S. News & World Report

The experts at U.S. News Best Cars can help you through every step in your leasing adventure. Our vast array of consumer advice covers topics including the lease versus buying decision and how to avoid costly leasing errors. We even have a step-by-step guide on how to lease a car.

It’s never a good deal unless it’s a good car. Our new car reviews will guide you to the right vehicle for your needs and budget. To ensure impartiality, our researchers look at the consensus opinions from the country's top automotive journalists and blend them with quantifiable data on safety and predicted reliability to create a score for nearly every vehicle available, from popular SUVs to sports cars. Those scores are used to develop new car rankings where you can see how different vehicles stack up against their rivals.

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When vehicles aren’t selling at the rate that automakers want them to, they frequently offer lease incentives with low monthly payments, small down payments, or both. We track the best lease offers available, and you’ll find them on our lease deals page. The U.S. News Best Price Program can also help lessees save money by connecting them with local dealers offering guaranteed savings off MSRP.

Finding the right insurance is an essential part of any vehicle purchase or lease. Our guide to car insurance will help you find the right coverages at the right price for your new ride.