Car Leasing Guide

When Does Leasing Make Sense?

Many people assume car leasing is a bad financial decision, but the truth is - leasing can be a great choice IF you meet the following three criteria:

• You like to switch to a new car every 3 to 4 years
• You drive 15,000 or fewer miles per year
• You have excellent credit

If this describes you, then leasing is the smart choice - but be aware of some of the disadvantages before you jump in.

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How to Get The Best Lease Deal

There are two things you really need to focus on if you want to get the best possible lease deal.

1. Always negotiate the price of the car as if you're buying it.
People are confused when it comes to auto leasing, and many don't know you can negotiate the purchase price of the car. In a lease, this is called the capitalized cost and it's a major factor which affects your monthly lease payment.
Be sure to use our Car Buying Guide to negotiate the lowest price.

2. Choose a Car With High Resale Value
When you lease a car, you're mainly paying for the usage of the vehicle. At the end of the lease, it's worth a lot less than when you first started driving it. You're responsible for paying this depreciation cost - which is the largest portion of a lease payment.

By choosing to lease a car with high resale value, you minimize this depreciation cost. Here's a list of the Top 40 cars with the highest resale values.

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The best lease deals are usually offered through the manufacturer in the form of subvented lease deals. When a manufacturer offers these lease deals, they typcially lower the interest rate (called money factor), and/or increase the residual values to make the lease more affordable. You can see if a manufacturer is offering special lease deals by contacting dealers directly.

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Comparing Lease Deals

Comparing different lease deals - with all the weird terminology such as cap costs, money factors, and residuals, can be confusing and cumbersome.

Luckily, there's a simple method that allows you to compare different lease deals rather quickly. You just need to figure out the monthly cost per $10,000 worth of vehicle.

If the monthly lease payment costs less than $150 per $10,000 worth of vehicle, then the lease deal is good.

The best lease deals will hover around the $100 per $10k mark. You can read about this method in full detail here: How to Quickly Compare Lease Deals

Tip: It always helps to know how to calculate a lease by hand when you really want to get into the nitty gritty of comparison shopping leases.

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