First, you need to find out if there are any down payments on the lease. A
down payment refers to the lump sum amount that you pay upfront, either in
cash, non-cash credit or trading allowance, to reduce your monthly payment.
You should think twice before putting cash down on a lease: not only are
you getting a rough deal, as you’re essentially forfeiting the general rule
of leasing: not putting any cash upfront, but the cash is not recoupable
at the end of your lease. There is another big disadvantage: in the event
of your car getting damaged or stolen, you insurance and the gap cost will
not cover the loss.
Mileage Limit
Most leasing corporations allow you a limit of 45,000 free miles over the
length of a 3-year lease. This may seem like a good deal at first sight,
but when you think about it only comes to 15,000 miles over a 12 month period
it’s not difficult to foresee why it might be difficult to stay within this
limit. Even people working from home have little trouble putting 15,000
miles on their cars.
If you exceed the mileage limit, the penalty for each excess mile can be as
high as 20 cents. This can add up quickly over the length of your lease: an
additional 4,000 miles a year over the length of a 3-years lease agreement,
will end up costing you an extra $2,400 in excess mileage charges!
Be realistic about your mileage needs, especially if you have to regularly
commute over long-distances, before you sign the agreement. think about padding
the miles that you expect to use since it is less expensive to agreement for
the extra before you sign than it is to pay the extra charges at end of
your lease.
Sales Tax
Sales tax is usually capitalized and added to the monthly payments.
However, some dealers choose not to include it in their calculations to
drive the advertised lease payments even lower. What they do instead is
state in the small print that the monthly payment excludes “sales tax”.
Make sure you carefully read the fine print for any extra, hidden costs not
included in the advertised monthly payment. Unscrupulous fees that
typically slip through the cracks include sales tax, registration and title
fees.