Common Car Leasing Fees

When you lease a car, expect to pay a number of related charges before you walk away.  Sure you may get your hands on one of those “nothing due at signing” leases floating around, but more often than not you’ll pay the fees listed below when you lease a new car, one way or another.

There are also a number of fees due when you return your car at the end of the lease term, so be aware of those of as well to avoid any unwanted surprises.  Remember, fees can vary greatly and be labeled differently, or even hidden or bundled among other fees.

Acquisition Fee

The acquisition fee, sometimes referred to as the “bank fee,” is basically an undisclosed origination fee charged by the financing company, just as you’d see on any other type of loan.  It can range from $250-$1,000 and is typically not itemized, but rather lumped into the capitalized cost of the vehicle.  It’s difficult to negotiate because it’s set by the financing company.

Credit Report Fee

Dealers need to assess your credit risk when they consider you for a lease; as a result, you’ll be charged a fee for the credit report.  It’s usually a minimal charge, around $20.

Destination Charge

Those cars don’t magically appear on the lot from the manufacturer.  Someone has to drive or ship them there, and guess who pays for it, you do.  Even if the plant is right down the road, the fee is usually fixed and non-negotiable.  The fee is typically several hundred dollars.

Disposition Fee

If you choose not to purchase your vehicle at the end of the lease term, you may be charged a disposition fee, which typically costs several hundred dollars.  It goes towards preparing the vehicle for resale.  Not everyone charges it, and you should try to avoid paying it if possible.

Documentation Fee

All that fun paperwork you get to fill out becomes even more exciting when you realize who’s paying for it, you.  Sometimes known simply as the “doc fee,” this administrative fee is usually another $50 or several hundred depending on who you’re working with.

Down Payment

If you decide to make a down payment on the vehicle, it will be collected when you sign the paperwork, so be prepared to write a check, or alternatively, swipe your credit card right there on the spot.

Early Termination Fee

If you cancel your lease ahead of time, you’ll have to pay an early termination fee, which is typically a few hundred dollars.  You’ll also have to pay the rest of the remaining monthly payments if you turn it in early.

First Payment

Typically, when you sign a new lease, the first monthly payment is due along with the rest of the fees.  Lease payments are paid up front, unlike loan payments, so expect to make your first payment when you sign.

Garage Fee

If you return your vehicle in before the lease term has expired, you may be subject to a garage fee, which is the cost to store the vehicle during the remaining months on the lease.  Despite the fact that the vehicle will likely be sold immediately, you’ll have to pay to store it until the lease term is up.

Insurance

You’ll be asked to show proof of insurance at the time of signing a new lease.  If you don’t have insurance, you’ll have to buy it before taking the car off the lot.

License/Tag/Title/Registration Fees

These are straightforward fees charged by the DMV for your new vehicle’s registration and licenses plates, collected by the dealer at signing.  They typically cost several hundred dollars, and are non-negotiable, as there isn’t any markup.

Over Mileage Fees

If you go over the allotted number of miles permitted in your lease, you’ll have to pay a per-mile cost, which can range 10 cents per mile and higher.

Security Deposit

Sometimes the leasing company may charge you a security deposit, which is returned at the end of your lease, less any charges for extra mileage and damages.  The cost is roughly the size of one monthly lease payment, and may only be assessed if you have poor credit.  However, you may be able to get a better financing rate if you lay down a deposit.

Tax

If you make a down payment on the vehicle, you’ll have to pay sales tax on that amount upon signing the lease documents.  After that, tax is generally charged monthly on top of your lease payment.

Wear and Tear

If your vehicle has excessive wear and tear, bald tires, chips and cracks, you may have to pay for these minor damages to be repaired when you return your vehicle at lease-end.