4 Costly Car Lease-End Mistakes To Avoid
Written by
Josephine Nesbit
Edited by
Cory Dudak
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A car lease is a long-term agreement allowing drivers to use a new vehicle for a specified period and a predetermined number of miles. It can make sense financially, as the average monthly payment for leased cars was $148 less than an auto loan payment in the second quarter of 2024, according to according to Experian. However, there may be surprise costs that drivers are unaware of.
Here’s what you can expect at the dealership before you turn in your car lease.
Lease-End Options
According to Kelley Blue Book (KBB), the most common choice at the end of a car lease is to return the vehicle and walk away. However, you can also buy the car for the predetermined residual value, extend the lease or enter a new lease:
- Return the car: At the end of the lease, you can return the car and walk away after making your final lease payment and settling any remaining fees.
- Buy the car: Another option is to purchase the car when the lease ends. You can pay with cash or finance the car based on the agreed-upon amount outlined in the contract. Keep in mind that not all lease agreements allow you to buy the vehicle at the end of the lease. There may also be associated fees with these options, including a purchase option fee, sales tax and registration and administrative costs, Car and Driver pointed out.
- Lease another car: Many lessees roll directly into a new lease to continue driving a newer model. KBB noted many automakers have been working to keep prices stable as tariffs come into place, but some manufacturers are experiencing slowdowns at assembly plants due to parts shortages.
- Extend the lease: Can’t decide on your next ride? You may be able to extend your lease by a few months. According to KBB, though, this option isn’t always available.
Common Pitfalls
Leasing a car may be cheaper, but many drivers face unexpected costs at the end of their term. According to KBB, these are some of the most common pitfalls:
- Mileage overage: Every lease comes with a mileage cap, typically ranging from 10,000 to 15,000 miles per year. If you go over the number listed in your contract, it could cost an extra 15 to 30 cents per mile. For example, driving just 5,000 miles over could mean a $750 to $1,500 bill.
- Excessive wear and tear: Leases typically require vehicles to be returned in “normal” condition. Charges may apply for worn tires, dents, scratches, cracked windshields or upholstery damage. Even if you think it’s minor, the leasing company may charge for repairs.
- Disposition fee: This fee is charged to cover the cost of cleaning and selling the vehicle after you return it at lease end. According to Edmunds, the disposition fee is typically $300 to $400. You can avoid this charge if you buy the car at the end of the lease, or in some cases, lease another car of the same brand.
- Early termination: Ending your lease before the agreed term can trigger a penalty, often requiring you to pay the remaining lease balance plus additional fees.
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