Car Leasing: Finding the Most Affordable Options & Strategies

Leasing itself is usually cheaper than a finance, depending on the money you put down and how long you plan to lease for. While various leasing provisions are available for an interested lessee, choosing some options over others, such as term, amount down and mileage, will lower your payment.

Term

If you check manufacturers' websites to view leasing advertisements, you'll notice that most leases run for a period or 36 or 39 months. While some people have different needs that leasing can provide for, such as an increased yearly mileage or an extended term, keep in mind that dealers advertise the lowest-priced scenario. Because leasing is based on paying for the portion of the vehicle that you use, about half of the vehicle's price stays out of the lease. This amount is based on bank-determined future market value. A vehicle depreciates quickest in the beginning of a purchase, figuring the car has its highest resale value at 36 to 39 months, or much less of a resale value at just 24 months or at 48 to 60 months when the vehicle is older and the mileage higher. Choose the 36- or 39-month option for the lowest monthly payment.

Mileage

Just as with leasing term, the future market value is also figured on expected lease-end mileage. The ideal yearly mileage for a vehicle is 12,000 per year -- anything after causes a decrease in resale value. Again, check the manufacturer's advertisement and you'll find the advertised mileage allowance is 12,000 miles per year. Some leasing banks offer up to 18,000 miles per year, but the increase in monthly payment will equal that of a finance payment. Some banks also offer a 10,000 miles per year option, but unless the lease is cheaper, it is not worth choosing over the 12,000-mile-per-year option. Choose 10,000 or 12,000 miles per year to enjoy a cheaper payment.

Money Down

The more money you put down toward a lease, the more your payment will drop. While this seems obvious, it is important to note the impact that $1,000 down has on a lease payment. For every $1,000 that you lease (remember that about half of the vehicle's price stays out of the equation), you will pay around $30 per month in payment. This is more significant than a down payment for financing, which equals about $18 per month in payment. Put down enough money to lower your payment, but not so much that you could suffer a loss. Be aware that if your vehicle becomes a total loss as determined by your insurance company, your full-coverage policy pays the bank, not you. Even if you pay your entire lease up front, you will not gain any of it back in such an event.

Negotiate

Leasing is based on the manufacturer's suggested retail pricing (MSRP). Just as most people would not pay sticker price for a vehicle purchase, you should also negotiate the same if leasing. Keeping in mind that every $1,000 equals $30 a month in payment, you should be able to negotiate at least $1,000 off of the MSRP (at least for cars over $20,000) which should automatically reduce your monthly payment or reduce the amount of money you have to put down. Research pricing just as you would if you were going to buy the car in cash, and negotiate the pricing accordingly.