Since 2020, at least one in four vehicles in the United States are leased and this trend has been gaining momentum over the years. If you are looking to keep lower monthly expenses, leasing a car may also be the perfect solution for you!

If you’re looking to lease a car in Maryland, we've compiled all the important information you’ll need.

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Reasons to lease a car in Maryland

Maryland residents experience much longer commute times than the average US driver. If you’re one of 15.6% of the residents who need to commute for over an hour, you know how vital your car is.

Applying and paying off a

car loan

in exchange for car ownership had its time, but people are shifting from this mindset, as the monthly payments can get costly. Instead, getting a lease term has become a more popular option as a way for drivers to lower their monthly car expenses. This also allows drivers to change their cars every few years if they don’t want to commit to the same car for years to come.

If you’re leaning towards getting a lease but you aren’t sure yet, below are some advantages of a lease.

Flexibility

Financing a car is a fixed agreement and a five to seven-year commitment—you’ll need to pay a down payment and then the

monthly lease payments

until you fulfill the loan amount. The payment terms are often rigid and you will be locked into this debt regardless of the condition of your car.

Leasing a car is more flexible in that it’s similar to a long-term rental. You will often have different options from the dealers to customize the lease terms and duration of the agreement to best suit your needs. Leasing a car will give you access to reliable transportation and you will remain debt-free after the lease term is over.

Lower monthly cost

According to Up Nest, Maryland’s cost of living continues to rise. Adding car-related expenses, including loan payments, can greatly increase the average monthly cost of living—especially when the cost of car ownership alone costs an average of $2,835.

If a car is essential, you can downsize this amount by getting a lease since the payments are normally much lower than loan payments. Your car expenses can be reduced even more if you negotiate for routine maintenance and other benefits.

No loss on depreciation

By the time you pay off the entire loan, your car may already be worth little to nothing. This is due to the rapid depreciation of a car after it leaves the lot.

You won’t have to be concerned about the depreciation when you lease a car since the dealer will take the car back after your lease term ends

Key Takeaway: Leasing a car will give you more flexibility and lower monthly costs. You also won’t need to worry about the car depreciating.

MORE:

Is it better to lease or buy a car?

What to look for when leasing a car in Maryland

The leasing process is quite standard, but familiarizing yourself with the terms and what to look out for will give you an edge when negotiating.

You may be required to have a down payment upfront, followed by monthly payments over the lease term. However, rather than paying towards car ownership, these payments are for the car’s depreciation as you use it.

A closed-end lease means the dealership will take your car back at the end of your lease term and you will be free of other responsibilities (aside from any penalties). However, if you want to keep the car after the lease is up, there are also options to buy out the car instead of returning it.

Keep in mind that the terms of a lease agreement are not set in stone so you can always negotiate for a better deal. You should pay attention to the terms below.

Terms to know

Capitalized cost: Your monthly payments are based on the capitalized cost, which is the total amount the dealer receives for the car. This includes the MSRP plus any add-ons, such as the service contracts, registration fees, warranties, and insurance. Lowering the “cap cost” will reduce your monthly payments.

Money factor: This determines the financing charge on your lease and is usually between 0.0021 to 0.0046. To translate the money factor to the annual percentage rate, multiply it by 2,400. You’ll want a lower money factor for lower monthly payments.

Mileage cap: Dealers often set a maximum mileage that can be driven each year on your leased car. If you plan on driving a lot, get a higher mileage cap since going over the limit can come with hefty penalties.

Red flags to watch for

We recommend taking more time to find a lease agreement that fits your needs—it will save you more money in the long run. Protect yourself by reading over the contract thoroughly to ensure all the terms you negotiated are included before signing. While dealers can be a joy to work with, below are some dealer behaviors you should be wary of:

Pressuring you to sign a lease on your first visit

You are discussed monthly payments without negotiating cap cost or money factor

Many extra fees and expenses are being added to the cap cost

How much should I expect to pay?

According to data from the last quarter of 2020 on

Statista

, the average monthly lease payment is $460. This gives you a good starting point on the range you should be looking at, but it will vary depending on your agreement. We also recommend aiming for the total car expenses to be at or below 20% of your monthly income.

How to find affordable insurance for a leased car

Another way you can lower your monthly car expenses is to find a better quote for your insurance policy.

Using the licensed insurance broker app

Jerry

can make this process quick and simple, and you won’t need to fill in any long forms or wait for an agent. To get started, all you need to do is download the app, sign up for an account, and answer a few questions. Jerry will then find you competitive quotes from over 50 top insurance companies and handle all the paperwork when you decide to switch.

Using Jerry is one of the fastest ways to find savings and users save an average of $879 on annual car insurance costs!

“
Jerry
was easy to use, and they saved me a lot of money on my truck. I would definitely recommend them.” —Johannes T.

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FAQs

How long is the average lease term?

On average, a lease term lasts 36 months (three years). However, dealers can also offer longer terms if needed. When choosing the length of your lease term, consider how long you want to drive the car and whether there will be any changes to your employment or living arrangements in the near future.

Is leasing a car a good idea?

Leasing a car is a good idea if you want to reduce your monthly car expenses or don’t want to commit to the same car long term. The benefit of leasing is that it is very flexible in terms of customizing the lease term and agreements so that it fits your budget and needs.

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