The average price of a new car is more than $48,000. Leasing is an alternative, and this year will account for 21% of new vehicle sales.
Compared to buying a new car with a loan, leasing will lower your bill by an average of $139 a month.
“You just have to keep in mind that there are mileage restrictions and potential excess wear-and-tear charges that could come along with leasing,” says Consumer Reports’ Keith Barry.
After finding the car you want, it’s time to negotiate.
“You can negotiate the vehicle’s overall price, which is also known as the capitalized cost in leasing, and that can significantly lower your monthly payments, so try to strike a deal that suits your budget,” says Barry.
Other things to negotiate include your lease interest rate, also called the money factor, which influences your overall payment. Negotiating your mileage allowance is important if you anticipate driving more than the standard limit.
Are you considering an EV? A federal tax credit of $7,500 for Electric vehicles might make that leasing even more appealing.
“While the tax credit for buying an EV comes with lots of restrictions – where it’s built, how much it costs, where the battery comes from – all those go out the window if you lease. The dealer can claim the full 7500 dollars tax credit. So, first, negotiate your best price and then make sure that the dealer passes that on to you by taking it out of the overall price of the car,” says Barry.
CR says to stay away from leasing a used car.
You’ll encounter higher interest rates and limited manufacturer support.
Plus, with the original warranty expired, you’re on the hook for repairing a car you will give back one day.