Car companies today are aggressively pushing leases. How many television ads have you seen that exclaim “lease from only $59 a week” or “lease to own for only $139 bi-weekly?” The crux of the car lease ads is that it is cheaper to get into a new vehicle by leasing it than by financing the purchase of a car or buying it outright. However, this is not always the case. As with most advertisements, some creative licenses have been taken when extolling the benefits of leasing a vehicle. In reality, leases are often much more expensive than advertised, and end up costing more than financing a car, truck, minivan or sport utility vehicle. And the reason for this is the hidden costs, extra fees and penalties charged by car companies on leases. Sadly, most people aren’t aware of all the hidden extras until their wallets have taken a hit. Here are 10 hidden costs, extra fees and penalty payments you should be aware of before leasing a car.
10. Interest and Taxes
Think there’s no interest or taxes charged on a car lease? Think again. The advertised price of $59 a week to lease a car is more like $80 a week when interest and taxes are factored in. And just as with the terms provided when financing a car, the interest and taxes charged on a vehicle lease can vary from dealer-to-dealer and state-to-state. People considering leasing a car should always factor in the interest and taxes that will be charged. The advertised price is just the beginning in terms of the true cost of a lease. And while you can negotiate some lease charges, it is very difficult to negotiate on the interest rate, and impossible to negotiate the taxes. While some U.S. states offer tax breaks on car leases, they are usually not enough to compensate for the high interest rates charged by car dealerships.