Six Things to Look for in a Car Lease Agreement

Before signing your next car lease, be sure to familiarize yourself with these six common car lease terms. (You may have to read the fine print.)

1. Terms – The length of your agreement, known as the car lease term, can last anywhere from 24 months to 5 years. According to Edmunds.com, shorter leases have become more popular in recent years.
2. Early termination – If you need to terminate your car lease agreement early, you'll often have to pay the amount owed on the remainder of your lease as well as a termination fee. Your lease should explain how this fee is calculated and what it includes, like administrative charges, resale costs, and penalties that can add up to hundreds of dollars. If you have to terminate early, consider exchanging for another car, buying the car outright, or finding someone to assume the lease for you.
3. Maintenance schedule – As part of your lease requirements, you may have to follow the manufacturer's recommended maintenance schedule, including regular oil changes. You'll be responsible for maintenance expenses unless they're explicitly covered by your warranty.
4. Excessive wear and tear – While some normal wear and tear is to be expected, be prepared to pay a penalty if the wear is excessive like a missing bumper or bald tires. The definition of normal wear and tear will be in your lease.
5. Mileage – A car lease agreement stipulates the number of miles you're allowed to drive before you incur a penalty – typically between 12,000 and 15,000 per year. If you exceed your mileage limit, the penalty is usually 10 to 15 cents per mile.
6. Extra insurance coverage – Often you're required to buy gap insurance coverage when you lease. If your car is stolen or totaled in an accident, gap coverage helps pay the difference between your car's actual value and the remaining balance owed on your lease.

Knowing and understanding your lease's terms is just one important aspect of car leasing. Just as you compare terms and fees, be sure to compare the terms and prices of auto insurance so you are getting a policy that meets your needs and budget. Read auto insurance reviews and compare quotes from different companies to find the best coverage at the most affordable prices.

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