Leasing a car usually costs more than buying over the long haul. But, if you know where to look, you can offset some of the added long-term expense with leasing specials.
These specials work by adjusting the leasing formula so you get either a lower monthly payment or a reduction in related fees such as the down payment — or “drive-off fees,” in leasing lingo.
With the specials and lower monthly payments, leasing offers you the ability to drive newer, more luxurious models you couldn’t otherwise afford, like that Range Rover you’ve been dreaming about.
It’s always a good idea to check for leasing specials before you go to the dealership, because they can save you thousands of dollars and may help determine which car you choose.
Where to find them
Once you decide what car or car brand you want to lease, you can find a summary of leasing specials on the car manufacturer’s website. Some dealership websites will also include incentives they’re offering on their inventory. This list can be under terms such as “new car incentives” or “leasing specials.” They’re typically advertised in a format such as “$399 for 36 months with $4,000 at signing.”
Incentives such as lease specials are routinely offered every month. These deals typically apply only regionally, so make sure to enter your ZIP code when searching.
Pick the right lease for you
Manufacturers may offer a choice between two leasing specials for the same car: a low monthly payment or low down payment at signing. Down payments are sometimes reduced all the way to zero, also known as “zero-down specials.”
If you are on a tight budget or have a lot of bills, lowering monthly payments by paying money upfront may be crucial. But, if you can afford it, putting less money down is usually a safer choice. Otherwise, if your car is totaled, you could lose any money you put down.
“It would be lost money if you were to have something terrible happen with that car,” says Steve Halloran, content editor at CarGurus, a car shopping site. “It is a financial risk, a bet that you’re making there.”
Even if you land a zero-down deal, you’ll still have to pay for registration, documentation and taxes, costs typically called “drive-off fees.” These fees shouldn’t cost more than about $1,000. If you choose, you may even be able to roll them into your monthly payments, but your payment will then be higher. Use a lease calculator to see how different drive-off fees and interest rates affect your monthly payments.
Watch the mileage
Leasing specials can limit the number of miles you are allowed to drive each year. Because the dealership will charge you for any additional mileage, it’s important to make sure you get a lease with enough room to roam.
“They’re displaying a $200 payment a month, but … you can only drive 10,000 miles a year,” says Edmunds.com senior consumer advice editor Ron Montoya, noting that most advertised lease contracts allow at least 12,000 miles a year.
You’ll have to pay an average of 20 cents for every mile you go over your lease agreement, according to LeasingGuide.com data. So if you go over your lease by 5,000 miles, you’re looking at a $1,000 bill.
If you know you drive a lot, you can buy extra miles at the start of the lease and include the extra cost in your monthly payment. Alternatively, if you know you won’t use the car all that much, you can cut the number of miles to receive a lower monthly payment. Err on the side of caution and get a lease with plenty of miles for your driving habits.
How to spot a good deal
Manufacturers use a variety of incentives to sell cars. They may offer a leasing special on a car one month and a cash-back rebate for buying it the next. If you’re not set on whether you want to lease or buy, you can compare the overall costs of each.
If you’re not sure whether you’re getting a good bargain on your lease, Halloran offers this advice: “If the lease monthly payments are going to be less than 1% of the car’s general average sticker price, then that’s going to be a good deal.”
Nicole Arata is a staff writer at NerdWallet, a personal finance website. Email: firstname.lastname@example.org.