Car Lease FAQs

If you are in the market to lease a car, you likely have some questions. These are some of the most frequently asked questions. See our Car Leasing eGuide for answers to other questions you might have about the car leasing process.

Q: I have a car picked out but I don’t know if it’s cheaper to buy or lease it. How can I tell?

A: Here’s a great calculator from that can help you figure it out. Just enter the purchase price, any rebates you might qualify for, your down payment, interest rate, sales tax, etc. and it will figure out your overall costs for both leasing and buying.

Q:  How do they actually figure out my monthly payment?

A:  Let’s say you’re leasing a $30,000 car, the price you’ve agreed to with the dealer. The dealer determines what the car will be worth three years later when you turn it in. This is called the car’s residual value. Let’s say it’s 55% or $16,500. Subtract that from $30,000 and you get $13,500. That’s what you’ll make your lease payments on, plus interest, taxes and fees.

Q: How do I buy the car at the end of my lease?

A: If you like the car and want to keep it, you’ll have to negotiate with the dealer for a good price. First check out Edmunds or Kelley Blue Book for a fair price. It’s often in the dealer’s best interests to sell it to you because then they don’t have to take it to an auction and sell it.

Q: How can I avoid a lot of fees when I turn in my leased car?

A: Here are a few tips:

  •    Have the car washed, detailed and serviced right before you turn it in.
  •    Make sure you service it at the required intervals and keep the records.
  •    Fix small dents, etc. that are covered under your insurance policy.
  •    Stay within your mileage limit.

Q: What if I go way over on my mileage?

A: If you don’t want to pay all the fees you’ll owe, try selling the car yourself.

Q: Do I have to have my car serviced at the dealer where I leased the car?

A: Absolutely not! Go any place that’s comfortable and convenient.

Q: Can someone else drive my leased car?

A: Most lease contracts specify who is allowed to drive a leased car. Typically, that includes a spouse or family member. Lease companies usually require a request for permission for drivers outside your immediate family. To be on the safe side, carefully read your contract or contact your lease company.

Q: Can I use my current car as a trade-in on a lease?

A: If it’s paid for, yes. Check on its fair trade-in value and make sure the dealer gives you full credit when your lease payments are calculated.

If you still owe money on your car, you need to get the “payoff” amount from your finance company and compare that amount to the car’s trade-in value. It the trade-in value is higher, you have “trade equity.” If not, you’re upside down and you may want to reconsider.

Q: Can I buy extra miles with my lease?

A: Yes, most leasing companies will allow you to buy extra miles up front — often at a less expensive rate — and include the cost in your monthly payments. For example, say you know you’ll drive 20,000 miles over the limit in a 24-month lease. If the buy rate is 12 cents per mile, you’ll spend 20,000 x $.12 = $2400. Spread over the 24-month lease, this means you’ll pay $100 extra per month, but you’ll avoid a $2400 (or more) bill at lease end. Most companies will even refund you any unused purchased miles at lease-end.

Q:  How do I get out of my lease before my contract expires?

A:  Ask your leasing company if they allow lease assumptions. If they do, you can look for someone with good credit to take over your lease. If you can’t find someone on your own, you can use an online service such as or Or you can try to sell the car on your own.

Q: What if I just walk into the dealership, hand them the keys to the car and stop making my payments?

A: Technically you can do this, but it will go on your credit report as a “repo” which will hurt your credit score and affect your future ability to borrow money.

Lease or Buy

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Hanscom Federal Credit Union
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