To most people, leases sound pretty straightforward. You agree to pay a certain amount per month, and the dealer hands you the keys to a car that you get to use for a certain number of miles and a certain period of time. At the end of the lease, you simply turn the car back in and never have to worry about resale value, maintenance, or costly repairs.
Not all leases are created equal though, and a savvy lessee can take advantage of some of the less-well-known leasing options to make the most of their experience. Edmunds recently highlighted five strategies that most people don’t know about, and if you’re looking to lease soon or are in the middle of a lease, they may prove to be helpful. Even better, you may even find a way to save money in the process.
1. You can make multiple security deposits
Leasing a car requires a security deposit that’s usually equal to one month’s payment rounded up to the next $50 interval. If you double or triple that amount, the leasing company will lower your interest, which in turn will lower your monthly payment. Unlike your college landlord, leasing companies then return your security deposit at the end of your lease, potentially saving you $1,000 or more.
Not every leasing company offers this option, and there are usually limits on the amount you can use as a security deposit. The only disadvantage is that with your money held until the end of your lease period, it pretty much defeats the purpose of leasing a car because you aren’t free to use your money for something else.
2. One-pay leasing is an option
For people who really want to save money on their leases, paying the entirety of the lease in a single lump sum is another option. Instead of paying several hundred dollars per month for three years, you just pay the entire lease off in exchange for a lower interest rate. For example, $12,000 over the course of three years might become $10,500 if you’re willing to write a check for the whole lease.
With interest rates low, it’s important for someone considering this option to first look at whether there’s somewhere that money could be invested at a higher interest rate. It’s also a strategy that requires the buyer to have quite a bit of money on hand. After all, not many people have $11,000 just sitting in a checking account. People who have poor credit but plenty of money may benefit from doing this, as well as anyone considering buying a luxury car in full.
3. You can continue your lease month-to-month
A lot of people let the end of their lease sneak up on them and then find themselves rushed to figure out what to do next. Dealerships love this, of course, because when people panic, they make poor decisions with their money. If you need a little more time after your lease is up to figure out what your next car should be, most leasing companies will allow you to keep the car on a month-to-month basis.
Doing so will give you more time to make your next move, but be careful. If you end up deciding to buy the car, you’ll still have to pay the original residual. If you’re not planning to buy the car, though, and just need an extra month or two to figure out what to do next, extending your lease can be a great option.
4. Transferring leases is usually simple
If you’re looking to get out of your lease for whatever reason, it’s usually pretty simple to transfer your lease to someone else. In fact, there are two sites that will handle the paperwork after they help you find someone to take over your lease. One is called SwapaLease, and the other is LeaseTrader. For about 80% of leases, it’s as simple as that.
The remaining 20% of leasing companies still allow transfers, but they require the original leaseholder to retain what’s known as “post-transfer liability.” If the person you transfer you lease to doesn’t pay everything off on the rest of the lease, the company can still come after you. Still, if you find yourself in a position where you really need to get out of your lease, it’s not the end of the world.
5. High-mileage drivers can still lease a car
Most leases are advertised for 12,000 or 15,000 miles per year, but that doesn’t mean leasing companies won’t be willing to write a lease for many more miles. You’ll have to pay more per month, but whether you own a car outright or are leasing it, putting a lot of miles reduces its resale value, so you’re going to pay more either way. Salespeople who drive for a living often end up with leases for as much as 30,000 miles per year.
While it used to be cheaper to arrange a lease for more miles from the beginning, that’s pretty much gone away. Whether it was arranged in the beginning or not, a car with higher mileage is worth less at the end of the lease, so buying more miles to avoid mileage fees might not save you as much money as it used to.