Leasing a Car? Avoid These Potential Penalties
Oct 24, 2022
2 min read
There are a lot of reasons people lease their cars. If you are the type that wants that new-car smell to linger forever, a lease could be a good option for you. However, there are certain rules involved on most lease agreements, and if you break one of the terms the costs could add up when you turn in the vehicle at the end of the lease. If you lease your vehicle, use these tips for leasing a car to avoid potential penalties.
1. Excessive Mileage
In the terms of your lease, you likely have a mileage stipulation. This limits the number of miles you can drive each year. You may incur a lease mileage penalty if you go over the mileage limits in your contract. As a result, you will typically pay a per-mile fee for every mile you go over. Be sure to negotiate the appropriate miles for how you intend to use the car before you sign the lease agreement, factoring in your daily commute and typical weekend activity.
2. Excessive Wear and Tear
When you lease your vehicle, a door ding isn’t just a door ding — it’s a potential penalty. Most leasing companies account for a little wear, but anything that would be considered excessive will be a penalty when you are ready to turn in your vehicle. Watch for excessive wear — both on the exterior and interior of the vehicle — to avoid any penalties at the end of your lease.
3. Late or Missed Payment
Of all the dos and don’ts of leasing a car, missing a payment definitely tops the “don’t” list. Here’s why: If you have forgotten to make a payment, or if your payments arrive past due, you will likely forfeit your deposit. If you have missed more than one payment, you could be in danger of having your vehicle repossessed. Avoid penalty by staying current, or contacting your leasing agent if your financial circumstances have changed and you need to renegotiate your lease.
4. Missed Maintenance
Is maintenance included a lease? Not always. But if your lease agreement does have a maintenance stipulation, pay attention. You will need to schedule regular car maintenance, including oil changes, tire rotations and other basic upkeep. Often, you can take this back to the dealership for maintenance. Keep good records of this work to avoid a penalty at the end of your lease term.
5. Breaking the Lease
Your lease agreement includes a term limit. If you choose to return the vehicle before the term limit is up, you could be facing a penalty for breaking the car lease — possibly even paying the remaining balance on the lease.
Review your lease agreement closely. If your circumstances change, forcing you to return the car early and break the lease, talk to the dealership about other options. For example, you could trade the car in for another vehicle or opt to purchase the car outright.