For the first time in more than a decade, leases make up more than 20 percent of all new car purchases, according to the automotive Web site Edmunds.com. Unfortunately, many first-time leasers aren’t thinking through the details.
Among the biggest mistakes: Failing to check the full ownership costs on the leased vehicles. People are often attracted to leasing because it allows them to drive luxury cars that they couldn't otherwise afford to buy. The problem: Auto insurance premiums are based on the value of the car, among other factors, and so those costs might be higher.
LeaseTrader.com is a site that works with people who can no longer afford their vehicle payment by transferring the contract over to another individual. According to the site, the number of people escaping a lease because they didn’t research the new car’s impact on their auto insurance premium will account for 4.5 percent of transactions this year, up from 2 percent in previous years.
The mistake is especially prevalent among consumers new to leasing, says Sergio Stiberman, CEO and founder of LeaseTrader.com. "In a struggling economy people tend to be fixated on the car’s monthly payment and nothing else," Stiberman noted in a press release. LeaseTrader.com says lease drivers facing higher insurance premiums are escaping vehicles such as the BMW 3 Series, Mercedes C Class, Infinity G37 and Lexis IS.
If you’re considering a lease on a luxury car, check out the free "True Cost to Own" calculator at Edmunds.com, which helps consumers compare expected costs of insurance, maintenance, fuel, and other expenses before deciding which car to buy or lease.
Meanwhile, keep in mind that most consumers are better off a buying used car than leasing. For more on that, see this post.