The costs associated with leasing a vehicle are often more substantial than buyers realise. It’s not just the monthly payment and the interest charged either. If you want to make an informed financial decision, it’s important to understand the fees that can come with a car lease.
For a car dealership to set up a lease, you have to pay an acquisition fee. An acquisition fee is a bank fee of upwards of $250 depending on the type of car purchased—common versus luxury. You can get around paying this fee when the lease is signed by adding it to the monthly payment. Of course, while this lowers your upfront costs, it increases your monthly payment.
Similar to renting or leasing an apartment, there is a security deposit associated with leasing a car. The difference between these two security deposits is that you can negotiate the car’s security deposit and may not have to pay it at all. There’s a higher chance of getting rid of the security deposit if you have good credit or if you have a good relationship with the car dealership already.
Occasionally there is a disposition fee associated with car leases so the company can cover the costs of cleaning and selling the vehicle after you return it. This expense can be avoided if you decide to purchase the car after the leasing term. This fee can range from $200 to $450.
A down-payment on a lease is optional and will help lower the monthly payments. One drawback of making this payment is that if the car is stolen or totalled, then that down-payment isn’t returned, and they range from $1,500 to $5,000. Another problem with making a down-payment is most states will require you to pay a tax on it.
Dealer and state licensing fees are standard fees with any transaction involving a car no matter the type of purchase or lease. The documentation fee given by the dealer ranges from $50 to $695 depending on where the lease was signed, but most states regulate this fee to keep it from being too high. State fees are automatically sent to the state by the dealer and are not negotiable.
Every payment for the lease is due at the beginning of the month, and it’s important to see different dealerships to calculate auto lease payment options before signing an agreement. The first payment is due when signing the lease. With proper negotiating, the first month’s payment may be avoided.
Sales tax varies depending on the state you lease the vehicle. In some states, the amount due equals the amount you would have to pay for the vehicle’s full purchase amount. In most cases, it is added into the monthly payment. Other states require the sales tax due as soon as the lease is signed.
An overage fee can be charged if the number of miles driven exceeds the agreed number of miles per year in the contract. This fee ranges from 10 to 30 cents per mile for each mile driven over the initial agreement. A damage fee will also be charged if there is anything wrong with the vehicle’s appearance or performance because of the leaser’s negligence while driving.
Considering the above points, would you lease a car for a taxi service?