How to Avoid Extra Car Leasing Charges

Avoiding extra fees with car leasing requires careful attention to the lease terms before signing, careful use of the auto while the lease is in effect and returning the vehicle within the terms of the agreement. First, understand how car leasing works. Second, know how you'll be using the car. And third, structure a lease to meet your requirements.

Understand How Car Leasing Works

In simple terms, car leasing means you pay for the portion of a vehicle you use while driving it during a set time and for a set number of miles. You are, in effect, being lent the car by a dealer or car leasing company and paying for the depreciation, administrative costs of the leasing company and interest on the value of the car lent to you for the duration of the lease. 

What this means for you is if your use of the car causes depreciation above what had been calculated to determine your lease payment, you will face extra fees. Avoiding these fees begins with knowing what you want the car for and how you will use it.

Accurately Estimate Your Use

Car leasing is extremely flexible. A dealer or car leasing company can structure a lease to meet your anticipated use of the vehicle. This means you can structure a lease going in to avoid excess fees on the way out by knowing how you will use the auto.

For example, an outside salesperson might drive far and above the 12,000 to 15,000 annual miles that the average person drives. However, if this is not accounted for in the lease, you could easily encounter excess mileage charges when turning the car in. In general, it is cheaper to base the initial lease on expected mileage driven, even if that raises the lease payment, than to pay excess mileage charges.

Take Care of the Vehicle

Excess mileage is not the only increased-depreciation fee you face in car leasing. Most leases also stipulate extra fees for excess wear and tear. First, be certain the lease clearly defines the expected condition of the car upon return. Second, be sure to have all scheduled maintenance performed and document it. Third, anticipate how the vehicle will be used and whether that might result in excess wear and tear. If so, account for that in the initial lease. Again, as with mileage, it is usually less expensive to account for and pay for the excess in the lease cost than as an extra fee.

Account for a Disposition Fee

If you do not purchase the car at the end of the lease, most leases call for a disposition fee to compensate the car leasing company for administrative expenses in taking the car back. You can avoid this fee by negotiating it out of the lease initially or choosing a leasing company that does not charge it. You can avoid coming out of pocket at lease-end by arranging to have it taken out of the security deposit at the initial time of lease.

Read the Fine Print

All auto leases are different. Be certain to carefully read the lease and note all charges. Shop around. Car leasing is competitive, and not all dealers will charge the same. You can avoid extra fees by choosing the right car leasing company.