When leasing a car, you usually have options for keeping the vehicle you’ve become accustomed to when the current lease expires. One option is to re-lease the same vehicle. Another is to lease a newer version of the same model.
Extend Your Lease Term
The only way to actually re-lease your car is to extend your lease term. This can be done at the end of your lease agreement by renegotiating the terms of your lease. Because the value of the car will have dropped over the course of your lease term, a new lease will have to be drawn to reflect the current value of the vehicle as well as a new depreciation value based on current market trends.
Extending the lease term might be a cost-effective option for you. Because the value will have dropped, the leasing agency would be better off to re-lease the car to you at a slightly reduced rate rather than leasing it to a new customer at a much lower rate that would reflect any wear and tear you’ve put on the vehicle over your lease term, such as additional mileage, worn tires, and small stains or holes in the interior fabric. By letting you keep the car in its current condition, the leasing agency can avoid the expensive repair costs it would take to put the car in a comparable condition to the newer cars it has on the lot.
The biggest concern many people have when re-leasing a vehicle is whether the lease agreement will stay the same. At the very least, you should expect the cost of your lease agreement to go down. For one thing, the overall value of your car has depreciated since you signed your original lease. For another, you've already shown that you're capable of making on-time payments. In fact, these are good things to bring up to your dealer if it doesn't offer you a better deal on your re-lease.
Another thing to keep in mind is your mileage limitations. Since the dealership will likely restrict the number of miles you can put on your car each year, you might want to negotiate a new mileage limit based on what you used during your original lease. If you need to use your vehicle more often than the dealership would like, you'd be better off to negotiate a higher mileage limit in your lease rather than purchasing additional miles later. If you don't need as many miles as the dealership allows, however, you may want to ask if you can lower the cost of your lease agreement by forfeiting some of those extra miles.
If you like the car you’ve been leasing, but want to trade it for a newer model or one with less wear and tear, see if the leasing agency will reclaim your vehicle at the end of the lease agreement and sign a new agreement for the same model. A trade-in isn't the same thing as re-leasing the exact car, but it could be a good alternative if re-leasing your current vehicle isn't an option.
Be sure to discuss trade-in options with your leasing agency before you sign a lease agreement.
When you lease the same model, you should be able to get a rate that’s comparable to your existing lease. If your lease required a down payment, a wise move would be to trade in the vehicle before your lease expires so the value of the payments you would’ve made so far can be deducted from the down payment or used as a bargaining tool to dismiss the down payment altogether.
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- Merriam-Webster. "Lease." Accessed April 12, 2020.
- AARP. "To Buy or Not To Buy." Accessed April 12, 2020.
- Consumer Financial Protection Bureau. "What is a Manufacturer Suggested Retail Price (MSRP)?" Accessed April 12, 2020.
- LeaseGuide.com. "Capitalized Cost – Cap Cost." Accessed April 12, 2020.
- Autotrader. "Leasing a Car: Can You Negotiate the Price?" Accessed April 12, 2020.
- Edmunds. "The 'Residual Value' of Leasing." Accessed April 12, 2020.
- Federal Reserve. "Keys to Vehicle Leasing: Future Value." Accessed April 12, 2020.
- LeaseGuide.com. "Money Factor—Explained." Accessed April 12, 2020.
- Federal Trade Commission. "Financing or Leasing a Car." April 12, 2020.
- Federal Reserve. "Keys to Vehicle Leasing: End-of-Lease Costs: Closed-End Leases." Accessed April 12, 2020.
Brandon Dennis holds a bachelor's degree in mechanical engineering from the College of Central Florida with a minor in journalism. Since then, he has enjoyed working in the automotive aftermarket and has done so for the past six years. He is also currently seeking an ASE Certified Technician Certificate.