Car Leasing Traps You Should Avoid

The residual value is the amount the car is worth at the end of the lease. Your monthly payment is based on this residual value. Shutterstock

On the surface, leasing looks like an inexpensive way to have a nice car you couldn’t normally afford. Or, maybe you want to enjoy a new car every few years. Regardless of your reasons, you would be wise to enter a leasing deal with your eyes wide open.

With new vehicle prices rising, manufacturers are offering fewer leasing incentives. It doesn’t mean leasing is a bad deal; it just means you must be vigilant. There are some pitfalls to leasing a car.

Paying Full Price for the Lease

The dollar amount the lease is based on is called the “capitalized cost” or “cap cost,” and you can negotiate that. If you can convince the dealer to lower the cap, you’ll have a lower payment and less money due at signing.