Car Lease FAQs

An Asian woman with glasses reads the terms of her car lease. She has her hair pulled into a low ponytail and is leaning against the green wall of her study.

If you're thinking about leasing a car, you likely have questions. Here are some of the most frequently asked questions people ask when they're considering a lease over financing:

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: We have an online calculator that can help you figure that out! Just enter common assumptions like down payments and rebate amounts, along with the leasing and purchase information you have, and the calculator will figure out your overall costs for both leasing and buying.

Q:  How do they figure out my monthly payment on a lease?

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. You can check out sites AutoSmart, 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 keep up with required service and save the records
  •    Fix minor damage that is covered under your insurance policy
  •    Stay within your mileage limit

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

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

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

A: Absolutely not, although they'd love it if you did! Go to a dealership that’s convenient and works with your schedule.

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 immediate family. 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. If 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: 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 repossession or "repo," which will damage your credit score and affect your future ability to borrow money.


Have more questions about leasing or are you still unsure if leasing is the right thing for you? Download Your Guide to Smart Auto Financing, a free eGuide from Hanscom Federal Credit Union that can help you make a sound decision. We will even show you a way to take advantage of the best of leasing and buying a car! Download the guide here.  


auto financing eGuide


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Hanscom Federal Credit Union
Hanscom Federal Credit Union

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