Leasing doesn’t give you legal ownership, but it is a lot cheaper than financing. Leasing is also a great way to try out a car without the long-term commitment of keeping it.

Here are some major advantages of leasing a car in Massachusetts.

Leasing is more flexible

Financing: When you finance a car, you usually need a down payment upfront. Then, you make regular payments to the lender over the years to

pay off the loan

and

sales tax

before you gain ownership—but this format means you’re locked in with debt for a few years.

Leasing: Getting a lease is like a long-term rental, with more options for the terms and duration of the agreement. You can drive a leased car for a few years and hand the car back at the end of the lease without any debt and move on to a

new car

MORE:

Buying a car in Massachusetts

Leasing means a lower monthly cost

In most cases, monthly car lease payments are lower than monthly loan payments. Depending on the agreement you signed, routine maintenance and other benefits may also be included to help you

reduce your car expenses

even more.

MORE:

Does car leasing include insurance?

Leasing means no loss on depreciation

The problem with owning a car is that it starts depreciating as soon as it leaves the lot.

When you lease a motor vehicle, depreciation is not a concern in the same way. You will only be driving the car during its prime and then you’ll return it after the lease period ends.

Key Takeaway: Leasing a car gives you more flexibility and is a great way to have access to a car at a lower cost.

MORE:

Is it better to lease or buy a car?

What to look for when leasing a car in Massachusetts

Before you get a lease, you should familiarize yourself with the process to ensure everything goes smoothly.

Payment plan: Similar to financing a car, a

down payment

may be required up front followed by monthly payments over the lease term. These monthly payments pay for the car’s

loss of value

as you use it.

Lease details: If you have a closed-end lease, you will return your car to the dealership at the end of your lease term without further responsibilities; however, dealers also offer the option to sign a lease with the possibility of purchasing the car at the end of the lease.

The terms in your lease agreement aren’t set in stone, so familiarizing yourself with them can help you negotiate a better deal. Be sure to pay attention to the terms outlined below.

Terms to know

Capitalized cost: This determines the amount for monthly payments. It’s based on the manufacturer's suggested retail price (MSRP) but can have add-ons, including the service contracts,

Massachusetts registration

fees, warranties, and

car insurance

. It is worth making an effort to negotiate for a lower “cap cost.”

Money factor: This is the financing charge you need to pay on your lease. It can range from 0.0021 to 0.0046. You can calculate the

annual percentage rate

by multiplying this number by 2,400. The lower the money factor, the lower your monthly payments.

Mileage cap: This is the maximum mileage you can drive each year on your leased car. Be mindful of your mileage cap, as dealers will charge you penalties per mile that exceeds the limit.

Don’t be afraid to ask for incentives, or wait for special lease deals and lease offers. Major automakers like Toyota, Subaru, Jeep, Nissan, Audi, and BMW tend to offer deals on leased vehicles in late summer and early fall when new inventory hits the lot—and that’s a great time to negotiate a deal on that new car.

MORE:

How to negotiate a factory order car

Red flags to watch for

The leasing process can be stressful, but it is worth putting some extra effort into finding a lease agreement that caters to you. Remember to read the contract carefully to ensure all the terms you negotiated are included before signing.

Be wary of any dealer that:

Pressures you to sign a lease on your first visit

Only discusses monthly payments without negotiating cap cost or money factor

Adds many extra fees and expenses to your cap cost

How much should I expect to pay?

Data from Statista

shows that the national average monthly lease payment is approximately $505. Your price may be higher since the cost of living in MA is higher than average.

Your overall payment amount depends on the size of your

down payment

, your zip code, the

model of the car

, and your interest rate. Overall, aim for the total car expenses to be at or below 20% of your monthly income.

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FAQs

How long is the average lease term?

On average, a car lease term lasts 36 months (three years). When determining the lease term, you should consider how long you intend to drive the car and whether you’re expecting changes to your employment or living arrangements.

Is leasing a car a good idea?

Leasing is a good idea if you want to have lower monthly car expenses and don’t want to drive the same car in the long term. If you want to own a car at the end of the payments, you can also negotiate terms with the option to buy out the car at the end of the lease term.

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