Leasing a Car in Minnesota

If you’re leasing a car in Minnesota, you’ll be able to make lower monthly car payments, but you’ll have to return the car to the dealership once the lease is up.
Written by Jason Tushinski
Reviewed by Jessica Barrett
If you’re a Minnesota driver looking to save some cash, leasing a car is a great option—but remember, you’ll have to negotiate capitalized costs and your monthly interest rate.
In the United States, leasing a car is becoming increasingly popular—in fact, one in four automobiles are leased, so it is very much a viable way of having a set of wheels in your life.
If you’re thinking about leasing a car in Minnesota, the
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has put together all the information you’ll need about doing so in the Land of 10,000 Lakes. We'll even show you how Jerry can help you save on your
Minnesota insurance costs
after you sign your lease, so keep reading!
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Reasons to lease a car in Minnesota

Minnesota drivers spend an average of 23.5 minutes a day on each one-way commute. While this is shorter than the national average, that’s nearly 50 minutes per day in your car, so having a ride you can trust is essential.
While using a loan to buy a car may be a tried-and-true method of hitting the road, leasing a vehicle is becoming increasingly popular, and you’ll pay lower monthly costs for a reliable vehicle. If you don’t want to own a car, leasing is the way to go.
If you’re not sure if leasing is right for you, consider the upsides to leasing.


With traditional car financing, you’re locked into debt and your significant monthly payment is followed by monthly loan payments that can last for years before you officially own the vehicle. On the other hand, a lease gives you the flexibility to determine the length of time you’ll have the car, and the amount you’ll pay while you drive it. Once your lease ends, you can walk away from that vehicle.

Lower monthly cost

While Minnesota’s cost of living is slightly lower than the national average, it is higher than most other Midwestern states. If you need to save money but still need a car, leasing is a great way to keep your car expenses in check.
Depending on your lease agreement, most lease payments are lower than monthly loan payments. As well, you might be able to negotiate some perks into your agreement, such as covered oil changes or free winter mats. This is why leasing can be a no-brainer in terms of keeping car costs low.

No loss on depreciation 

When you buy a car, its value begins to depreciate the moment you drive it off the lot. When you’re paying off a loan, this means the car will hold little value once you’ve finished paying it off. But if you lease a car, that’s not your concern. 
Your lease payments cover the use of driving the vehicle in its prime years, and once your lease is up, you can walk away. That vehicle, and its lowered value, becomes someone else’s problem.
Key Takeaway: When leasing a car, you’ll pay less each month to drive a reliable vehicle.

What to look for when leasing a car in Minnesota

If you’ve never leased a car before, you’ll want to walk into a dealership with as much information as possible to ensure you land the best possible deal. 
As with a traditional financing arrangement when buying a car, you’ll likely need to make an upfront payment on your lease, followed by monthly payments to cover the cost of driving the vehicle. 
For a closed-end lease, you return the car at the end of your lease and walk away with no further obligations to it. If you’d like, you can ask your dealer if they offer the option of purchasing the car once the lease term ends.
When leasing a car, most dealers are willing to negotiate. Keep the following terms in mind as you wheel and deal in your quest for a leased vehicle that fits your budget and needs. As well, you’ll learn to spot any red flags.

Terms to know

  • Capitalized cost: These are the costs that your monthly lease payments are based upon. This may just be the manufacturer’s suggested retail price, but your cap costs can also be bumped up due to extra fees, such as registration fees, service contracts, warranties, and insurance costs. Feel free to ask to negotiate lower cap costs to reduce your monthly payments.
  • Money factor: This term refers to the interest rates you’ll pay for your lease and usually falls in a range between 0.0021 and 0.0046. In order to calculate your interest rate, you multiply the money factor by 2,400. You’ll want to keep your interest rate as low as you can.
  • Mileage cap: In most lease agreements, dealers will specify a mileage cap, or how many miles per year you can drive your leased car. If you go over this cap, be prepared to pay extra.

Red flags to watch for

When searching for a lease that works for you, shop around and find a deal that works. Whatever the dealer promises you, make sure to get it in writing. Be wary of any dealer who does the following:
  • On your first visit, pressures you to sign a lease 
  • Doesn’t want to negotiate cap costs or money factor but wants to focus solely on monthly payments
  • Adds extra fees to your cap costs

How much should I expect to pay?

During 2020’s last quarter, the average monthly lease payment was $460 (according to
). You’ll want to keep your lease payments hovering around this average to keep your finances in good shape. As a rule of thumb, you don’t want to spend more than 20% of your monthly income on car payments.

How to find affordable insurance for a leased car

If you do choose to sign a lease, you'll need
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Most leases run three years, or 36 months. When figuring out what time frame works for you, think about how often you’ll drive, and whether you expect your employment or living situation to change.
Depending on your needs, leasing a car can be a great idea. If keeping your car costs low is your main priority, leasing may be a good way to go. If you’re intent on owning a vehicle, financing may be the better option for you.
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