With a leased vehicle, “you gotta be good to your car!” Most lease agreements take into account normal wear and tear, but be sure you understand the difference between normal and excessive wear. Leasing also requires certain maintenance obligations to be done on a regular schedule with documented records to verify the service was performed. If you do not regularly maintain the vehicle, carefully consider whether leasing is right for you.
Leasing can be an option if you put less than 15,000 miles annually on your vehicle. If you think you’ll drive more than this, you may need to consider purchasing extra mileage. Going over your agreed-upon mileage limit can result in mileage fees – typically 12 to 15 cents a mile. Speak with your dealer about extra mileage options.
Leasing may not be the way to go if you think there’s any chance you will have to end a lease early. As mentioned before, leasing is essentially paying for the depreciation of the vehicle you’re driving. If you end the lease early, you’re not paying for the full depreciation amount you agreed to in the lease terms. Your dealer might charge you an early termination fee to make up the depreciation difference. Read the details of your contract for early termination penalties.
Leased vehicles cannot be changed or modified by adding permanent accessories. The vehicle must be returned in the same state as it was originally leased to you (less normal wear and tear).
If you’re leasing a vehicle for the first time, you probably have a used vehicle that you will want to trade in. This can serve as a down payment and will help lower your monthly lease payments. However, when your lease is over and you want to lease another vehicle, you’ll need to come up with additional funds for a down payment.
If you plan to use your leased vehicle exclusively for business, you may be able to claim the lease payment as a business expense. Check with an attorney or tax consultant on the deductibility options available for your situation.