Educational Consumer Tips

Leasing a Vehicle

Author: Better Business Bureau
Category: Auto

Rights and Responsibilities

Federal disclosure requirements give consumers essential and readily
understandable information about costs and terms involved in the lease. You
should know exactly how much the lease will cost.

When you lease a vehicle, you have the right to:

·        Use it for an agreed-upon number of months and miles
·        Turn it in at lease-end, pay any end-of-lease fees and charges, and "walk away"
·        Buy the vehicle if you have a purchase option
·        Take advantage of any warranties, recalls, or other services that apply to the vehicle.

You may be responsible for:

·        Excess mileage charges when you return the vehicle. Your lease agreement will tell
you how many miles you can drive before you must pay for extra miles and how much the
per-mile charge will be.
·        Excessive wear charges when you return the vehicle. The standards for excessive
wear, such as for body damage or worn tires, are in your lease agreement.
·        Substantial payments if you end the lease early. The earlier you end the lease, the
greater these charges are likely to be.

The fundamental differences between buying and leasing include:

·        Ownership – When you lease, you are not the owner of the vehicle.
·        Up-front costs – Up-front costs may be higher when leasing: you may have to pay
a security deposit and a “capitalized cost reduction” (like a down payment).
·        Monthly costs – Monthly leasing costs are usually lower than monthly vehicle loan
·         Vehicle returns – With a lease, you return the vehicle at the end of the term and
“walk away.”
·        Future value – Unlike purchasing, the consumer does not assume the risk of
decreased future value.
·        Mileage – Leases often have a mileage limit, typically 12,000 – 15000 miles per year.
·        Excessive wear – A lessee may be responsible for the costs associated to excessive
wear on the vehicle at the end of the lease term.
·        End of term – Unlike buying, when your lease term is complete you may have a
new payment to finance the purchase of the vehicle or to lease another vehicle.

More information, including educational brochures, can be obtained by contacting:

Federal Reserve Consumer Help (888)-851-1920 (Phone)  Or Federal Trade Commission (877) FTC-HELP
(877-382-4357) www.ftc.govc