HOW TO AVOID EXTRA COSTS AT THE END OF YOUR LEASE
If you pay close attention to the details of your lease agreement, you may be able to save yourself some money. Lease agents constantly nickel and dime consumers when their lease runs out. Some examples are $250 to dispose of your vehicle, $1000 for extra miles you put on the clock, and $200 to replace the light bulb and worn tires.
Disposition Fee
Here is what triggers those fees and what you can do about it. Leasing companies charge you a disposition fee if you choose not to buy the vehicles at the end of your lease. This fee is set as a compensation for the expenses of selling, or otherwise disposing of the vehicle. It typically includes administrative charges; the dealer’s cost to prepare the car for resale and any other penalties. Make certain this fee is stated clearly in the contract and that you agree to it before signing the contract. At lease end, you are not in a position to negotiate because the dealer may use your security deposit towards this fee.
Excess Mileage Charges
Most lease contracts include an excess mileage charge. A premium charge is made for each mile over the agreed upon mileage stated in your contract. Sometimes this penalty is as high as 25 cents per mile and can add up quickly. To avoid the risk of running thousands of dollars in excess mileage penalties at the end of your lease, always check the “per mile” charges in your contract. Even more so, be realistic about your mileage before signing the contract. If you think the limit is unrealistic based on your commutation needs, then negotiate with the dealer to get a higher mileage or contract for additional miles.
Excess Tear-and-Wear Charges
Another potential cost at the end of the lease is any excessive damage done to the normal tear and wear of the vehicle. There are no standard guidelines or formula to define what is “excessive” and “normal”. Therefore, it is left up to the discretion of the leasing company to determine what charges, if any, will be made. This leaves you at the mercy of unscrupulous leasing agents to set stringent tear-and-wear standards. It is of utmost importance that you read the description of these standards and understand them and agree to them. If your leased vehicle is damaged prior to the end of the lease, you may find it cheaper to repair the damage yourself rather than pay the excessive charges of the leasing agent. If there is a dispute over the charges at the end of you lease, get an independent third party to do a professional appraisal. This appraisal should give itemized repair details and cost. The appraisal should also include how much in tear-and-wear the value of the vehicle has been reduced.
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