Questions about leasing

jls said:

I have run some numbers on Nissans website and find that I can lease the Murano for 3 years/15k/year for about $150/month less than 5 yr conventional financing.
My concerns are:
1. How is normal wear and tear determined and how do they determine how much to charge for something they consider more than normal? Do they charge you the full repair cost?
2. What happens if you want to terminate a lease early?
3. Can you sell the car and pay the dealer something back if you want to get out of the lease early?
4. Is it just not worth leasing to avoid these potential problems?

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All very good questions.

1. Wear and tear is determined by the Leasing Company and not the Dealer (this is a misconception because you are not leasing from the Dealer but the leasing company). The problem is that sometimes wear and tear are not spelled out in the leasing contract. Almost certainly, when you turn in the car, you will have to buy new tires, belts, brakes, and do the services if they are due at the time of turn in. IMO, it is best to stay on top of scheduled maintenance on you vehicle to avoid getting hit with the expenses of turning your vehicle in. It is a good idea to maintain too records and receipts of work done on the car.

2. If you terminate the lease early you may face a penalty unless you are trading in for a new vehicle. This is spelled out in the contract and should be review carefully. If you do terminate early, besides fees, you may be responsible for depreciation that hasn't been paid for in your lease. The longer you have your lease the more depreciation you've paid for and the less money you will owe the leasing company. When trading your car early, this depreciation will be rolled over into any new vehicle you purchase unless you pay for it outright.

3. Yes but it is rare that you don't come out of it with some more money out of your pocket.

4. Leasing, IMO, involves planning. If you don't plan, it can burn you. I don't lease any longer because I burned myself in my 1st lease and my driving habits (very high milage) preclude me from leasing. My advice if you lease is to:

Not lease for more than 2 years.
Make sure you have enough milage.
Purchase Gap insurance (some Gap insurance will cover wear and tear expenses).
Buy only a vehicle that you know will fit your NEEDS for the life of the vehicle.

That last one got me because I had leased a regular cab pickup on a 3 year lease. In just over a year, I needed something with 4 doors and 4 seats. Not to mention an automatic for my new wife (the truck was a stick).

Personally, I won't lease. I drive over 20k miles every year (drove 30k this year). I like to modify my cars on occasion (I added a twin turbo kit to my old J-30t). Finally, I like to own my cars (which is a mental misconception on my part) after my term is up.