The best online sources of market resale and trade-in values for used cars is Kelley Blue Book and NADA Guides. However, understand that these prices are educated estimates and may differ from each other.

No. You can only buy extra miles at the beginning of a lease. If in the middle of a lease, you can begin saving money to pay the lease-end over-mileage fee. See our Lease Mileage Calculator to determine how much to save each month.

Can I remove a co-signer from a lease?

No. A lease is a long-term contract. Its terms and conditions cannot be changed mid-lease, nor can the lease contract be rewritten. Furthermore, it’s not possible to “refinance” a lease, and remove a co-signer, as might be possible with a loan.

No. There are no policies or laws that give consumers the right to cancel a car lease or purchase once papers have been signed and the vehicle driven off the dealer’s lot. There’s a common misconception that there are 24-hour or 3-day “right-of-return” or “cooling off” laws that apply to automobile purchases or leases.  Such laws don’t exist.

Dealer profit margin is the difference between sale price of a vehicle and dealer’s cost. Generally, potential profit margin is the difference between MSRP sticker price and dealer invoice price. However, most vehicles sell for less than MSRP and a dealer’s invoice cost can be offset by bonuses, holdbacks, and factory-to-dealer rebates. Therefore, profit can easily be different for every car a dealer sells.

Absolutely. You can trade a car and lease a new car. You’ll get credit for its value just as you would for a car purchase. Your trade-in credit acts as a down payment and reduces your monthly lease payment. If you still owe money on the car, the dealer will pay off your old loan as part of the trade deal. However, if you still owe more than your car is worth, it gets more complicated. See Trade Car – How it Works for more details.

Car lease mileage allowances  are always stated as miles per year or annual mileage. For example a lease might allow 10,000 miles per year. Divide by 12 to get 834 miles per month. If the lease is for, say, 39 months, multiply 39 times the monthly mileage allowance of 834 miles to get a total of 32,526 miles for the entire lease term.

No, not with a consumer vehicle lease, the kind we discuss on this web site. All “closed-end” consumer car leases have a mileage limit, on which the lease-end residual value is base, which is used to calculated the monthly payment. As we say many times on this site, leasing is not renting, and doesn’t work like renting. Having said the above, “open-end” commercial business leases typically don’t have mileage limits — but the lease essentially pays for the entire value of a vehicle. The business is more interested in tax and accounting benefits.

Only if you are a business and will use the vehicle for legitimate documented business purposes. Otherwise a business car lease will provide no benefits, and a “closed-end” consumer lease would be a better solution.

Maybe. Leasing requires a good credit score which most 18 year-olds don’t have since they have not had time to build credit. It also requires a good steady job, which is usually a problem for 18-year olds, especially those in college. Therefore, the most practical option that would allow a teen to lease a car would be to have a co-signer, someone who is willing to take over payments if the primary lessee fails to do so.

At the time a car lease contract is signed, there are payments and fees that must be paid by cash or check. These combined costs are called  “amount due at lease inception.”

The costs and fees that are typically due at lease inception can be some or all of the following:

• First month’s payment
• Down payment (cap cost reduction)
• Tax on down payment
• Official tag and registration fees
• Security deposit (very rare)

Although some leases do not require a down payment, the first month’s payment and official fees are still required. In this way, “down payment” and “amount due at lease inception” are different.

Yes, but it’s a little different than for a loan. You always pay a finance fee, called money factor, on a car lease just as you pay a finance fee, called interest, on a car loan. Money factor is expressed as a very small number such as .00175 but can be converted to APR interest rate by multiplying by 2400. For example, a lease money factor of .00175 is equivalent to 4.2% APR interest rate.

You pay finance fees on a car lease because leasing is a form of financing and the finance company wants to be paid for the use of their money. Leasing is not renting. The lease finance company uses their money to buy a vehicle from a dealer and leases it to you. By leasing, you essentially borrow the finance company’s money that was used to buy the car.

If you are already in a car lease and the contract has been signed, the monthly payment as specified in the contract can’t be changed anytime during the life of the lease. It is not possible to change the terms of the lease in any way that might reduce the monthly payment amount.

Unlike a car loan, which can be refinanced, leases cannot be refinanced. It is not possible to end one lease and begin another on the same car.

If you find that you can’t afford your car lease payments, you should everything possible to avoid a repossession, which will be expensive and will damage your credit for years into the future.

The best option is to simply find a way to keep the car and keep making payments until the lease is completed.

If you can’t do that, know that ending a lease early is very expensive unless you are very near the end of the lease.

Buying out your lease is also not a practical option.

You could try the option of letting someone else take over your lease, as described in this article, How to Get Out of a Car Lease.

However, if you want to continue your lease but simply want to lower your payments, there is no way. Talking with your lease company won’t help. Sorry.

I’m new to car leasing. What do I need to know?

The best place to start learning about car leasing is at the first page of our free Lease Guide. Although there is a lot of information in the Guide, you don’t need to try to soak it all up at once. Go through it quickly the first time, making mental notes of sections that you want to return to later for a more detailed reading. If you don’t get all your questions answered in the Guide, come back here to the FAQ page, use our Search tool, read our Home Page, use our Resources page, read our Articles, use our Calculators, check to see if our optional Lease Kit has what you’re looking for, or send an email to our Leasing Expert. Everything can be easily accessed from our Home Page.

Primarily, and most importantly, vehicle price should be the focus of your negotiation. This is the only element of the deal that is directly controlled by the dealer. All other elements such as residual, money factor, down payment, security deposit, and acquisition fee are all controlled by the leasing company, for which the dealer is only acting as an agent. Sometimes, though not often, the leasing company gives the dealer authorization to negotiate some of these factors. You can, however, shop around for better deals at other dealers. See Negotiating a Car Lease for more details.

Unfortunately, there are no options for reducing car lease payments. Furthermore, there is no way to refinance a lease as there might with a car loan.

If you feel that you can no longer afford your lease, your only option may be to terminate your lease early or transfer your lease. Early terminations can often be expensive, so take caution if you think this might be a viable option for you. And transfers are not always possible. Read our article Get Out of Car Lease for some advice about lease termination and transfers that may be helpful to you.

The answer depends on a number of factors that are different for everyone. Your driving “personality”, your vehicle choices, and your financial objectives are important factors. For more details see Lease vs Buy in the Lease Guide and use our Lease vs Buy calculator.

It depends. If your current car is paid for, you can certainly use it as a trade-in. Just be sure you know its fair trade-in value, and that the dealer gives you full credit when your lease payments are calculated. If you still owe on your car, you will want to get the “payoff” from your finance company and compare that amount to the trade-in value of the car. If the trade-in value is higher, you have “trade equity.” If not, you’re “upside down” and you may want to reconsider. You know, too, that you would do better financially if you sold your car yourself.

This often causes misunderstandings. Lease inception amount (same as “due at signing” or “drive out” cost) includes all charges that require up-front payment in cash, such as taxes, official fees, deposits, first month’s payment, and down payment. Notice that “down payment” (cap cost reduction) is only part of the total “due at signing” amount. The down payment amount is the only part that reduces  capitalized cost (amount financed), which reduces  monthly payment amount.

As you probably already know, lease contracts are not designed to be easily or inexpensively terminated before the normal end date. However, you do have a number of options available to you that could minimize your costs and headaches. Unfortunately, an adequate discussion of these options would be too lengthy to present here. A full discussion of all your lease termination options, including how to choose the right option for you, is contained in our article, Exit Your Lease Early.

Sales tax laws can be quite different between states and localities. Most states simply apply the local sales tax rate to each monthly lease payment. A few states want all sales tax paid up front, based on the value of the vehicle or the sum of all monthly payments. See Lease Fees and Taxes for more details.

Most lease contracts specify who is allowed to drive a leased car. Other than the lessee, other drivers may be restricted to a spouse or family member. Lease companies typically require a request for permission for drivers other than those allowed by the contract. The best policy, if in doubt, is to read your contract or contact your lease company. There is no standard way in which this is handled by different lease finance companies.

What if I move to another state with my leased car?

If you move to another state with your leased vehicle, immediately notify your lease company of your move.

This is not only to change your billing address and the car’s “garaged” address but, more importantly because sales tax rates may be different between your old location and your new one, the tax portion of your monthly payment may change — up or down. This should only amount to a small change in your total payment, unless you move into a state, such as Texas or Georgia, in which taxes are required to be paid, in total, up front at the time you register your car in the new location.

If you move from a state that taxes entire value or sum of lease payments (i.e., you are not paying sales tax with each monthly payment), you should check with your new state’s Department of Motor Vehicles to determine if you can get credit or a refund for part of the tax you’ve already paid.

Registration and tag fees may also be different when you register the car in the new state.

Also notify your car insurance company of your move. Your insurance rates may also change due to differences in state insurance rates, even if you stay with the same company. In some cases, your old insurance company may not be licensed to do business in the new state. In that case, you’ll have to look for another company.

If you move to another state there are lots of things you must think about and handle. Don’t overlook your car lease as one of those things.

It’s important to realize that if you drive lots of miles, you’ll pay for those miles one way or another, whether you lease, buy, or rent. Any vehicle suffers value depreciation for every mile that it is driven. You could consider purchasing your vehicle, which avoids mileage fees but this may not be your best option. For more details see Over Mileage Car Lease.

You can track your mileage and determine lease-end mileage costs with our Lease Mileage Calculator.

No. A car lease is for a specific vehicle which means you can’t simply change vehicles in the beginning, middle or any other time during your lease. It’s not like renting.

No. Leasing is restricted to brand new car, not used cars — with the exception that used luxury cars may be available for lease by specialty used car dealers in some larger cities. However, leasing used cars is not recommended due to low residual values and high lease finance rates. Used car leases cannot be evaluated using the calculators on this web site. For more detail, see the article Used Car Leasing.

Some used car dealer advertise that they lease cars or have “lease-to-own” programs. These are not actually leases but either high-interest purchases or high-rate rentals.

No. Leases cannot be refinanced in the same way a loan might be refinanced. If your objective is to lower your monthly lease payment, contact your lease company, bank, or finance company to ask if they can offer you any assistance. See Refinance Car Lease for more details.

You have a number of options, including returning, purchasing, and trading. Regardless of which option you may be leaning toward, it may not be your best choice financially. For example, it would not be wise to return a car that is worth more than your lease contract purchase price. Buy it, then sell it and pocket the profit. There are a number of factors you need to look at to make your decision, but It’s not possible to explain it all here. Therefore, you should consider getting our optional Lease Kit, which contains a special section, The Lease-End Advisor, that fully explains everything you’ll need to know.

Lease contracts aren’t required to show finance rate (lease money factor) or interest directly. However they do show the total of all your monthly finance charges as “Lease Charge” or “Rent Charge.” You can calculate the interest rate very easily as follows: Divide the Lease/Rent Charge by the number of months in your lease. Then divide the resulting number by the sum of Adjusted Cap Cost plus Residual. This is your Money Factor, which can be converted to Interest Rate by multiplying by 2400. The Lease Inspector in our Lease Kit will do this calculation for you, as well as telling you if you got a good deal.

A car lease is a debt obligation, like a loan. In fact, leases are often not identified as leases and can look just like loans on the report. Sometimes the amount owed includes the lease residual amount, sometimes not. It depends on the company doing the reporting to the credit bureau.

If you use your leased vehicle for business purposes, you can generally directly deduct the costs as business expenses — monthly payments, insurance, mileage, maintenance — based on the percentage of business use versus non-business use. The actual benefits depend on the specifics of your business situation. For this reason and because tax rules are never simple, you should get the advice of a CPA or tax advisor before making any decisions. If you don’t use your vehicle for business reasons, there are no tax benefits.

You usually can’t. Since leasing companies can set residual values as they see fit, the only way to get the actual residual value being used for a specific car, from a specific dealer, who uses a specific leasing company, is to ask. Some dealers will provide you this information; some will not. We provide estimated average residual values for all new makes/models of vehicles in the Residual Calculator in our Lease Kit so that when you get your actual residual value, you can determine if it’s good, average, or not-so-good.

You can’t, unless you ask the dealer from which you plan to lease. You can estimate the money factor by dividing the current local new-car loan interest rate (see Bankrate.com) by 2400. But each leasing company sets its own factors. And it can be different, depending on the term (length) of the lease — and on your credit rating.  So, you have to ask to get the actual value that will be used by your dealer. You’ll have to ask the finance manager, not a sales person.

Nope. The part of the formula that determines the finance portion of your monthly payment is (Cap Cost + Residual) x Money Factor. It looks like we’re multiplying the sum of Cap Cost and Residual by an interest rate, but Money Factor is not interest rate, although it can be converted to interest rate. The reason Cap Cost and Residual are added is to facilitate the calculation of average amount financed: (Cap Cost + Residual) / 2 (the divisor 2 is part of Money Factor).  By the way folks, we didn’t invent the formula. It’s used throughout the leasing industry and is perfectly legit.

No, not usually. Typical lease terms are set by lease companies at a minimum of 24 months. And because most of a vehicle’s depreciation happens in the first year, a shorter new-car lease would be very expensive. A better solution is to “assume” (take over) an existing lease from someone who wants to get out and only has a year or few months remaining. These are very often good deals. Swapalease provides listings of such deals. See Short-Term Car Lease for more details.

Yes, in most states, whether you buy or lease, you are protected as a consumer from getting stuck with a car that’s a dud. However, Consumer Reports identifies the following states as having lemon laws for purchased cars, but none for leased cars: Alaska, Alabama, Colorado, Michigan, Missouri, Nebraska, New Mexico, Ohio, Oklahoma, Pennsylvania, and W. Virginia. Check with your state Attorney General’s office of Consumer Affairs to be sure and to check for more specific information.

Yes. A lease is similar to a loan in that the leasing company is trusting you to make regular payments against the money they have tied up in the car you drive. You may find it difficult if not impossible to lease if the dealer obtains your credit report and finds that you have a spotty payment record or have too many financial obligations already.  Unfortunately many people have never seen their credit report, which may have old or inaccurate information — which can result in problems on leases and loans for as long as 10 years. Before you ever step into a dealer showroom, you should already know your all-important credit score. There are three of them, from the three credit bureaus.  Get your Experian Credit Report FREE at freecreditreport.com.  Your score determines what kind of deal you’ll be offered, or if you’ll be turned down. See Credit Problems and Car Leasing for more details.

Leasing requires that you carry and pay for liability, collision, and comprehensive insurance on your leased car, just as you would if you purchased. However, the amount of required insurance specified in your lease contract will nearly always be more than the state-required minimum liability coverage you might otherwise choose to carry on your vehicles. In that case, insurance for your leased car will be more expensive. See the article Car Insurance for Leased Cars for more details.

Yes, most leasing companies will allow you to “buy” extra miles up front — often at a less expensive rate — and include the cost in your monthly payments. For example, say you know you’ll drive 20,000 miles over the limit in a 24 month lease. If the “buy” rate is 12 cents per mile, you’ll spend 20,000 x $.12 = $2400. Spread over the 24 month lease, this means you’ll pay $100 extra per month, but you’ll avoid a $2400 (or more) bill at lease end. Most companies will even refund you any unused miles (of your ‘bought’ miles) at lease-end.

See Extra Miles Car Lease for more details.

You do not get your down payment back because it is  an up-front prepayment of part of your capitalized cost — to help reduce your monthly payments. Some people confuse “down payment” with “security deposit,” which is refundable to you at the end of your lease. Some leases require a security deposit, most do not. See Down Payment for more details.

If you know approximately what monthly lease payment you can afford, use our Lease Affordability Calculator to determine what car price you might lease.

A good lease money factor is one that is equivalent to the current lowest new-car loan APR interest rates. Current new-car loan rates can be found at Bankrate.com but can vary by region of country and bank or finance company. To convert money factor to interest APR, or APR to money factor, see Money Factor Converter.

A good car lease residual value is one that is at least 50% of the MSRP sticker price of a leased vehicle, for a 36 month lease. Higher residuals produce better deals and lower monthly payments. Find average residual values for all vehicle makes and models in the Lease Residual Calculator in the Lease Kit.

No. Leasing is not renting. Leasing is a long-term commitment similar to a loan. Once the lease contract has been signed and the vehicle driven off the dealer’s lot, the deal is done. There is no 3-day, 30 day, or any other time period in which a leased car can be returned, unless the dealer provided written notification of such a policy. A car lease cannot be canceled although it can be terminated early, if that solves the problem. See Early Lease Termination for more details.

It depends. Technically, a leased car can be traded just like a purchased car. However, since a lease balance is paid down much slower than a loan — because payments are much smaller — it’s common to have no trade equity at any time during the lease. If the lease balance (“buyout”) is more than the trade value of the vehicle, the lease is “upside down.” Trading might still be feasible, however. See Trade Leased Car for more details.

That’s fine. You still need to find the best price possible, just like if you were leasing, which you can do at Edmunds. You may also want to use a good auto loan calculator to determine your payments and total loan costs if you plan to finance your purchase.