Most manufacturers go on a blitz with their "End of the Year" sales events between Christmas and New Year's Eve. But is it really a good idea to lease at that time?
The leasing pitch...
There are essentially two times in every calendar year when you can get a deal on a car: During a change of model year in August and during a change of calendar year in December.
When the end of the year rolls around, there's a particularly big push for leasing. But leasing makes sense only in certain circumstances:
- You plan to lease for less than four years
- You have good credit
- You drive fewer than 12,000 to 20,000 miles each year
For the most part, leasing is a disaster for you. Edmunds.com has new numbers that tell the story. Basing their calculations on a car that sells in the mid $20,000 range, they've estimated leasing will cost you $6,000 more than buying the car new. That loss goes up to over $10,000 vs. buying a gently used version of that same car a couple of model years old.
When you get on that lease treadmill every two to four years, each time you're taking on an obligation and you have nothing to show for it at the end. Each time you take on 100% of the loss in value of the vehicle for the time you drive it. That's why Clark is never keen on leasing a car.
There are only two exceptions to his "no leases" rule. The first is if you like new wheels every two or three years. The second has to do with fancy luxury cars, electric cars and some other alternative fuel vehicles. These kinds of cars don't get discounted, but you will find factory-subsidized leases that can be a deal. (You'll know it's a factory-subsidized lease when you see a manufacturer's ad on TV or a website telling you it's such.)
With increases in car reliability, it's entirely possible that you might keep a car 10 years without breaking a sweat. So buying and holding onto a car is a far better strategy. But we know that people love their leases! So with that in mind...
Here's a look at the worst leasing gotchas
If you do decide to lease, beware of these common gotchas:
Low mileage allowances
Make sure your lease agreement doesn't come with an exceedingly low mileage allowance. If you drive 15,000+ miles annually and your lease only allows for 12,000 miles each year, you're going to have to fork over extra cash.
It's not uncommon to pay 20 cents/mile over your mileage allowance. So in this example, you'd be responsible for an extra $600 annually or $50 monthly. Watch out and know what you're getting into based on your driving habits.
Excessive wear-and-tear assessments
Clark has said that the average leased vehicle gets hit with wear-and-tear charges to the tune of nearly $2,000 when it is turned back in at the end of the lease.
When you lease a vehicle, be sure to take extensive photographs of the interior and exterior before you drive off the lot so there's no question that you're returning it in top shape.
If you do spill something in the car or tear the upholstery, fix it before returning the car. It will be much cheaper for you to have it repaired on your own than to let the dealer charge you their inflated repair prices.
Totaling your car in an accident
If your leased vehicle get totaled in an accident, you could be responsible for a giant gap between the amount the insurance company will pay and the stated residual in the lease. Ask the dealer when you lease for free gap insurance to protect you.
Is it possible to get out of a lease?
The good news is yes, it is!
It is possible to get approval for a qualified person to take over your lease. LeaseTrader.com is one site where you can begin your search. It's an auto lease transfer marketplace, which means you can find someone to assume your lease obligation and you walk away lease free.
But you've got to be realistic and make sure you have a car that would be desirable to a potential fellow lessee.