Re-Lease for Less
Are you paying too much on your lease? It's easy to get confused by the terminology and numbers. But even if you've been driving the car for a while, it's not too late to snag a good deal -- consider refinancing.
Car buyers are naturally suspicious of leasing, and no wonder. You need a glossary to decipher the terminology and the patience of a land tortoise to understand how the deals work. And evenmastering the vernacular may not do you much good. Dealers often balk at revealing the numbers behind the deal, so you end up having to negotiate on the monthly payment. The result: Many leasers pay too much.
The money factor
Enter LowerMyLease.com. The Web site exists to let leasers shop for a lower payment. At this site you refinance your lease, much as you'd refinance a home mortgage, without having to break the lease and turn in the car, which could trigger early-termination fees. Nor do you have to find another person to lease the car and take over the payments (a process called lease assumption), which could also involve hundreds of dollars in fees.
Row 0 - Cell 0 | Should I Lease or Purchase a Car? |
Row 1 - Cell 0 | What Will My Car Lease Payment Be? |
Row 2 - Cell 0 | Kiplinger's Car Finder |
Row 3 - Cell 0 | More Stories by Mark Solheim |
The secret behind the lower payments is the money factor -- leasing lingo for the interest rate (to get the annual percentage rate, multiply the money factor by 2,400). "People have been getting killed on the rate at dealers," says Tarry Shebesta, president of Automobile Consumer Services, the Cincinnati car buying and leasing company that runs the site. LowerMyLease.com's customers pay a rate slightly higher than it has to pay, but not as high as most dealers charge.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Here's how the process works: From the pull-down menus, select your model and the lender for your existing lease. The phone number of the lender is supplied, so you can call and get the lease's current payoff. Then you pick a new lease, assuming you find a better deal. "You may be able to lower the payment, shorten the term with the same payment or get the same term but with a lower payoff," which allows you to buy the car for less at the end of the lease, says Shebesta. After you qualify for the new lease, the service sends you a new contract and pays off your old lease.
Say you leased a 2005 Acura TL a year ago for 48 months with payments of $577 per month and a current payoff of $30,000. One quote features a 36-month lease with a monthly payment of only $508. The main difference is a low money factor that translates into a 5.5% rate.
Current leasers aren't the only ones who can use the site. If you're still making car payments, the service will even buy your car from you and write a lease on it.
Smart lease shopping
If you're in the market for a new car and are considering leasing, check out another site run by the same company: LeaseCompare.com. Leasing makes sense for most people who trade in before they've paid off their car loan. And after a few years during which leasing companies retrenched after getting burned on too-generous leases, finance companies are again making attractive lease deals.
LeaseCompare.com makes the transaction transparent. You start by choosing a car -- either a new model or a late-model used vehicle. Then you have two options: Shop for a lease using a market-based price for the car, which LeaseCompare.com provides, or shop for a lease based on a price you've already negotiated with a dealer.
Suppose you're shopping for a 2006 Acura TL, which has a base sticker price of $33,940. You choose LeaseCompare.com's market price, which is $32,340. Next you pick a term -- 36 months is a good choice because during that time repairs are covered under warranty and you aren't likely to be faced with maintenance expenses, such as replacing tires. The lowest payment, assuming you don't put any money down, is $517, from the lender with the lowest money factor.
One caveat about LeaseCompare.com: It currently doesn't provide quotes on leases offered by carmakers' so-called captive finance companies. To check out subsidized leases, go to Edmunds.com, get pricing on the car you want and click on "Incentives."
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Mark was the editor of Kiplinger's Personal Finance magazine from July 2017 to June 2023. Prior to becoming editor, he was the Money and Living sections editor and, before that, the automotive writer. He has also been editor of Kiplinger.com as well as the magazine's managing editor, assistant managing editor and chief copy editor. Mark has also served as president of the Washington Automotive Press Association. In 1990 he was nominated for a National Magazine Award. Mark earned a B.A. from University of Virginia and an M.A. in Writing from Johns Hopkins University. Mark lives in Washington, D.C., with his wife, and they spend as much time as possible in their Glen Arbor, Mich., vacation home.
-
Holiday Office Party Taxes: Know Before You Go
Tax Tips The IRS could tax your gifts from Christmas raffles, Secret Santa, and White Elephant. Here’s how.
By Kate Schubel Last updated
-
2025 Tax Reform: Will the SALT Deduction Cap Be Repealed?
Tax Deductions Some lawmakers say it’s time to end the $10,000 cap on state and local tax deductions.
By Kelley R. Taylor Published
-
Roth IRA Contribution Limits for 2024 and 2025
Roth IRAs Roth IRA contribution limits have gone up. Here's what you need to know.
By Jackie Stewart Last updated
-
Four Tips for Renting Out Your Home on Airbnb
real estate Here's what you should know before listing your home on Airbnb.
By Miriam Cross Published
-
Five Ways to a Cheap Last-Minute Vacation
Travel It is possible to pull off a cheap last-minute vacation. Here are some tips to make it happen.
By Vaishali Varu Last updated
-
How to Figure Out How Much Life Insurance You Need
insurance Instead of relying on rules of thumb, you’re better off taking a systematic approach to figuring your life insurance needs.
By Kimberly Lankford Last updated
-
Amazon Big Deal Days Is Coming! We’ve Got All the Details
Amazon Prime To kick off the holiday season with a bang, Amazon Big Deal Days runs Tuesday, October 8 and Wednesday, October 9.
By Bob Niedt Last updated
-
How to Shop for Life Insurance in 3 Easy Steps
insurance Shopping for life insurance? You may be able to estimate how much you need online, but that's just the start of your search.
By Kaitlin Pitsker Published
-
Five Ways to Shop for a Low Mortgage Rate
Becoming a Homeowner Mortgage rates are high this year, but you can still find an affordable loan with these tips.
By Daniel Bortz Last updated
-
Retirees, It's Not Too Late to Buy Life Insurance
life insurance Improvements in underwriting have made it easier to qualify for life insurance, which can be a useful estate-planning tool.
By David Rodeck Published