Laws on Leasing a Vehicle

Leasing a vehicle is equivalent to renting. It can be a good option for those who want to drive a new car every 3 to 5 years. Be aware that the vehicle is the property of the dealer and therefore comes with strings attached. It is incumbent on anyone considering leasing a vehicle to fully understand what is required.

Credit Rating

You should have a good credit history before leasing a car because credit requirements are more stringent than for buying a vehicle.

Mileage Limits

Dealers place restrictions on the number of miles the vehicle can be driven in a year, which range from 10,000 to 15,000 miles a year. Exceeding the limit of miles may result in substantial penalties.

Fees

Although the vehicle is leased, you must pay tax, title and license fees. In some cases, a security deposit may be required.

Insurance

As with any vehicle, you are expected to provide proper insurance coverage. Typically, insurance policies for leased vehicles are more expensive than vehicles that are purchased.

Vehicle Maintenance

You are expected to keep the vehicle in good condition. At the end of the lease, the dealer will hold you responsible for any damages that are beyond normal wear and tear.

Option to Buy

At the end of the lease, you will have the option to purchase the vehicle. The purchase price is the value of the vehicle, post-depreciation.

Early Lease Termination

Terminating a lease early may be very costly and can also adversely affect your credit and your ability to buy a new car.

Resources

• Learn More About Leasing a Vehicle