How to Lease a Car Cheap

by Neal Frankle, CFP ®

If you want to know how to lease a car cheap, I have good news. You can save a fortune with what I’m about to share with you. I want to go on the record and say that the longer you drive a car, the cheaper it is if you own rather than lease it.

I buy cars and then I run them into the ground – sometimes with the help of my kids. Having said that, if you’re going to lease a car anyway, let’s save you some bucks.

As background, understand that lots of people are unable or uninterested in continuing their car lease. You can turn their desire into huge savings for yourself. This is known as a lease transfer. Here’s how it works:

The current lease holder gives you the car and says goodbye to the down payment he made…but also to the monthly payments. They often do this because they can’t afford the payments any longer. So for the right person, this is a big win.

And for you, it’s an even greater win.

First, you don’t have to come up with the down payment as you would with a lease from a dealership. Second, these transfers are usually much shorter than new car leases. According to Investor’s Business Daily, they typically run only 18 months. If you were leasing a car for such a short duration directly from the dealership, you’d pay a heck of a lot more. This means your monthly budget plan is going to work better.

Sometimes, if the original lessee is in real dire straits, you can negotiate them to agree to pay down the lease so your payments are even lower than the original lease.

In effect, you’re leasing a (slightly) used car and that’s why you’re saving so much. The other guy paid for most of the depreciation, which is a huge plus for you.

There are a few good companies that facilitate these kinds of transfers. You can find them on the web by searching “lease transfer.” These companies do charge fees, but they are nominal compared to the money both parties save.

The only person who doesn’t like this arrangement is the new car salesperson. Boo hoo.

Of course there are downsides to taking over a lease. The car is used, so it would be best to have it checked out and make sure you get a good extended car warranty. Also, check the mileage cap on the lease to make sure you’re not getting a pig in a poke.

In my opinion, this is an excellent option. What say you? Would you take over someone else’s lease? Have you ever done this? What was your experience?

Why those questions are driving around in your head, let’s take a look at the Pilgrim Posts on Parade:

 

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{ 5 comments… read them below or add one }

Johnathan Stein August 6, 2010 at 1:10 PM

OK, did I miss something, like a link to a “Lease Transfer” site(s)? Or is this something that requires research.

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Jennifer Barry August 6, 2010 at 10:07 AM

Thanks for the link Neal! I have never leased a car before. I have saved money by buying a former rental car and inspecting it very carefully. Then I kept it for 9 years.

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Little House August 6, 2010 at 8:36 AM

Thanks again Neal for the link!

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Kevin@InvestItWisely August 6, 2010 at 8:01 AM

Thanks for the linkback, Neal.

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Evan August 6, 2010 at 7:55 AM

I have a buddy that keeps participating in these! He LOVES it! He says he can pick up a fantastic like new car and not be ‘stuck’ with it.

The problem, he tells me, is that you have to weed through a lot of junk. There are pages upon pages of people trying to get out of their lease becaues they have 100 miles/month left.

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