Leasing a Car in New Jersey

Leasing is a great way to drive a reliable car at a lower monthly cost than a traditional auto loan, but do your research before signing a lease agreement.
Written by R.E. Fulton
Reviewed by Carrie Adkins
Leasing a car is a good option for
New Jersey
drivers looking to reduce monthly
car payments
, but you’ll need to negotiate the capitalized cost and money factor.
  • Leasing a car in New Jersey can be a cost-effective alternative to buying, but it’s important to understand the process and key terms, and what red flags to watch out for.
  • Leasing a vehicle allows you more flexibility and often lower monthly payments than a traditional
    car loan
  • A typical car lease in New Jersey comes with a monthly payment of around $460.

Reasons to lease a car in New Jersey

Although buying a car with a loan is the best route to ownership, auto leasing is becoming an increasingly popular way to drive a reliable car at a lower monthly cost. Essentially the same as renting a car long-term, leasing is a great option for drivers who don’t want to own a car. 
If you’re on the fence about leasing a car, consider the following advantages of a lease in the Garden State: 
  • Flexibility: Unlike traditional car loans that lock you into debt for years, a lease allows you to choose the terms and duration of your agreement. You’ll have the car as long as you need it, and once your lease is up, you can walk away debt-free. 
  • Lower monthly payments: According to Bestplaces.net, New Jersey’s cost of living is higher than the U.S. average—car-related expenses make up a big portion of the monthly cost of living. In general, your monthly car lease payment will be significantly lower than a loan payment, and depending on the terms of your lease agreement, it could include routine maintenance and other benefits. 
  • No loss on depreciation: You’ve probably heard it before—your new vehicle starts losing value the minute you drive it off the lot. With a lease, you don’t need to worry about depreciation, since you’re paying to use the vehicle during its best years and won’t be responsible for it afterward. 
Key Takeaway: Leasing allows you to pay less each month to drive a car that works for you. 

How the car leasing process works in New Jersey

Just like traditional financing, leasing a new car usually involves an initial down payment followed by monthly payments over the course of the lease term; however, instead of paying off a loan, you’re paying for the value that the car loses as you drive it. 
In general, once your lease term ends, you’ll return the car and walk away with no further responsibilities; this is called a closed-end lease. Oftentimes, dealers will give you the option to sign a lease that allows you to purchase the car at the end of the lease term.

Leasing terms to know

Many of the terms of your lease agreements are negotiable, so you’ll need to understand these concepts before you head to the dealership.
  • Capitalized cost: The “cap cost” is the amount of money on which
    your monthly car lease payments
    are based. It may be the same as the manufacturer’s suggested retail price (MSRP), but it could increase, due to add-ons like registration fees and warranties, or decrease, due to car lease deals and incentives—you can negotiate a lower cap cost to get lower monthly payments. 
  • Money factor: This is the interest rate you’ll pay on your lease, usually ranging between 0.0021 and 0.0046. Multiply the money factor by 2,400 to calculate the interest rate—you want it to be as low as possible to keep your monthly payments manageable.
  • Mileage cap: Most dealers put a limit in the lease agreement on how many miles you can drive each year. Take this number seriously, since you’ll have to pay extra fees if you exceed it. 

Red flags to watch for

Take your time finding a lease agreement that works for you, and make sure to get everything in writing before you sign. Be cautious of any dealer or leasing company that
  • Asks you to sign a lease contract on your first visit
  • Only wants to discuss monthly payments without negotiating cap cost or money factor
  • Includes a lot of extra fees and expenses in your overall lease price

Expected lease costs

According to
, the average monthly payment for a super prime lease in the first quarter of 2022 was $505. Aim for a monthly payment around that amount and try to keep your total car expenses at or below 20% of your monthly income. 
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The average car lease term is 36 months (3 years). Consider your needs, including how often you intend to drive the car and whether you expect your employment or living situation to change when determining the right lease term for you.
Leasing a car can be a good way to make your car expenses more affordable, but it’s not the right option for everyone. If owning your car is important to you, leasing is probably not the best idea.
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