Should I lease a vehicle? Things to consider…..

Payment Comparison The monthly payments on a lease are usually lower than monthly finance payments on the same vehicle because you are paying for the vehicle’s expected depreciation during the lease term, plus rental charge, taxes, and fees. At the end of the lease, you must return the vehicle unless the lease allows you to purchase it, and you agree to the terms and cost. To be sure the lease fits your situation, consider the beginning, middle and end of lease costs. Compare different lease offers and terms, including mileage limits, and also consider how long you may want to keep the vehicle.

At the End of the Term At the end of your lease term, you may return your vehicle, pay any end-of-lease fees and charges, and “walk away.” If you had a purchase option, you may buy the vehicle for an additional agreed upon price which is a typical provision in retail lease contracts. If you end the lease early, you may be responsible for early termination fees, which could be substantial.

Mileage Limits Another consideration is the mileage limit-most standard leases are calculated based on a specific number of miles you can drive, typically 15,000 or fewer per year. You have the option to negotiate a higher mileage limit, but you will normally have to increase your monthly payment since the vehicle’s depreciation will be greater during your lease term. If you exceed the mileage limit set in the lease agreement, you’ll probably have to pay additional charges when you return the vehicle.

Additional Responsibilities When you lease, you are also responsible for excess wear and damage, and missing equipment. You must also service the vehicle in accordance with the manufacturer’s recommendations. You will also have to maintain insurance that meet’s the leasing company’s standards.

For More Information www.federalreserve.gov/pubs/leasing