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Auto Leasing 101


Your Lease Obligations & Responsibilities
       Auto leasing provides great flexibility; however, like a loan or a cash purchase, there are costs and expenses associated with operating, maintaining and repairing vehicles.

Periodic Payments
     The lessor is obligated by law to provide you the following information, verbally and in the lease agreement, about your periodic payments: the total number of payments, the total amount of payments, the amount of each payment, the due dates of each payment, the late-payment charge and how it is calculated.

Repairs and Maintenance
     You will be responsible for repairs and maintenance when you lease, just like a loan. Since terms like "normal wear and tear" and "reasonable maintenance" can easily be misunderstood, make sure your repair and maintenance responsibilities are spelled out specifically in the contract and that you understand them before signing.
      All warranties must be disclosed to you. While the terms of these warranties vary greatly, you are required to follow the maintenance schedules specified in order to keep the warranty coverage.
      Because warranties differ so much in their terms, the lessor may offer an extended service plan. These are normally described as "extensions" of existing warranties. If you are considering a short term lease, most major repairs will likely be covered under the manufacturer's warranty. Whether you choose a short term or a long term lease, you may want to consider the service benefits offered in these types of plans like emergency road side assistance and rental car allowances.

Vehicle Registration and Use
     While leases may include restrictions on moving the vehicle out-of-state without permission, they do not normally include limitations on permitting other family members to drive the car. However, you are responsible for any applicable renewal registration fees or property tax obligations required by your state, whether you choose to lease or own the vehicle.
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