What Should I Know About Leasing a New Car?

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CARS.COM — Just like purchasing a car, everything about a lease is negotiable, experts say, even though dealers may not expect you to negotiate. If you decide to lease, make sure you know all of the costs involved to ensure that leasing is a good value for you.

Related: Benefits of Leasing Your New Car

Keep the following tips in mind if you’ve decided to lease your new car:

  • Whether you’re buying or leasing, set up a competitive bidding environment to get the lowest price on your purchase price and down payment. Shop around for the best lease payments and terms at different dealerships. Competition is the only effective means for a car buyer to get dealerships to lower their price.

  • Make sure you negotiate the purchase price (or capitalized cost) and not the monthly payments.

  • Depreciation is a factor in the value of the car so know the residual value used to calculate how much you’ll pay, as well as the purchase price you would pay if you decide to buy the car at the end of the lease period. In most (but not all) leases, these will be the same figure. Also know the money factor (similar to an interest rate) you’re paying. For a comparable interest rate, multiply the money factor by 2,400.

  • To find the most advantageous deals, use leasing software to analyze the scenarios. offers software that allows you to compare deals using actual residual, money factor and security fee data straight from lenders.

  • Make sure you know all of the fees involved. Expect at least an initial acquisition fee and a disposition fee when turning in the car. Ask about fees associated with mileage too. Remember, these leasing fees are negotiable.

  • All car leases should include guaranteed auto protection, or gap, insurance, which covers the difference between what the car is worth and what you owe on the lease. Put another way, if the car gets stolen or totaled, the lease gets terminated early and you owe the bank thousands of dollars. Gap insurance will cover this cost.

  • Lease for the shortest term you can afford. Short-term car leases make the most of leasing’s primary advantage, getting a new car frequently. It’s imprudent to pay for a car for four or five years without eventually owning something. Don’t lease a new car for longer than its original bumper-to-bumper warranty.

  • When a dealer tries to sell you undercoating, window etching or a security system, just say no. It’s not your car. Why buy these extras for the bank?’s Editorial department is your source for automotive news and reviews. In line with’s long-standing ethics policy, editors and reviewers don’t accept gifts or free trips from automakers. The Editorial department is independent of’s advertising, sales and sponsored content departments. 

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