When deciding whether to lease or buy a car, it’s important to understand what you’ll actually pay in both situations. So “how much is a car lease” anyways?
When you walk into the dealership, you’ll be presented with a certain monthly lease price (how is a car lease calculated) and a certain term, commonly 36 months.
That, combined with the down payment will be the total amount paid during the lease, not including sales tax (license/title), which is typically paid monthly and can rise or fall depending on tax rates in your state.
So let’s look at an example:
2009 Acura MDX
Car Lease Payment: $530
Term: 36 months
Down Payment: $3,000
In the above scenario, you would pay $21,550 over the term of the car lease (the down payment includes the first month’s lease payment). At the end of the lease term, the car would need to be returned, or alternatively, you could purchase it.
Now a 2009 Acura MDX might sell for roughly $40,000 new, so you’d be getting the car at about a 50% discount for temporary ownership. It’s up to you to decide if it’s worth holding onto the car for its first three years for half its original cost.
The main takeaway from this article is to determine what you actually pay over the life of the car lease versus what you might pay if you bought the vehicle upfront. It’s important not to overlook any costs.
Also be sure to look at the residual value of the car (as determined by the dealer) after the lease term to determine if you’re getting a good deal, as it plays a key role in establishing your monthly lease payments.
And don’t forget about excess mileage costs related to a lease; if you think you’ll drive the car a lot, pay for more miles upfront to avoid higher costs later, especially if you don’t think you’ll keep the vehicle after the lease.