Car Lease Ending? Expect to Pay More
Now may be a good time to buy a certified used car.
If you are one of the millions of Americans who leased a new vehicle in 2016, expect a substantial markup if you’re in the market for another lease this year. According to Edmunds, consumers will pay an average of $1,600 more over the life of their lease in 2019 compared with 2016 (leases typically last three years).
The cost is rising for three reasons: New vehicles cost more than they did three years ago; auto-loan interest rates, which are used to calculate lease payments, are at a 10-year high; and resale values have fallen, which inflates the total price you pay over the life of the lease.
If you’re reluctant to pay more to lease a car but want a reasonable monthly payment with some protection against ponying up for unexpected repairs, consider buying a certified pre-owned, or CPO, vehicle. These vehicles have been thoroughly inspected and carry a manufacturer-backed warranty that may offer one-year comprehensive coverage and extend the powertrain warranty to 100,000 miles. Leases have a provision that allows you to buy out the lease. Compare what you’d pay to buy your leased vehicle with the selling price of a CPO vehicle.