Leasing a Car in New York

Leasing a car in New York gives you more flexibility and cost savings than a car loan, but you may have to return the car at the end of your term.
Written by Mary Cahill
Reviewed by Jessica Barrett
Leasing a car in
New York
is usually cheaper than
, but you’ll need to return the car when the lease period ends. 
  • Leasing a car is usually cheaper and more flexible than taking out a car loan in NY, but you may need a high credit score to qualify.
  • Leases usually have mileage caps—read the fine print carefully.
  • Carefully consider the payment structure, end-of-lease costs, and insurance costs.
  • Don’t be pressured into signing by an auto leasing company that won’t negotiate.

Reasons to lease a car in New York

If you want to save money and get around on your schedule, you might want to lease a car. 
New York State’s transportation costs are about 40% higher than the national average, with 52.9% of commuters using their own car. And for the 28.2% of drivers who spend over 60 minutes a day in their car, travel costs can really add up. 
Here are a few of the advantages of leasing a car in New York. 

Leasing means more flexible car responsibilities

Financing: When you finance a vehicle, you commit to paying a years-long car loan—in other words, you agree to be in debt. There’s also a
down payment
to consider.
Leasing: With a lease, you can choose the terms and duration of the agreement and drive a reliable car at a lower cost. Depending on the conditions of your lease agreement, you can either choose to buy out the vehicle at the term’s end or return it to the dealership with no strings attached. 
MORE: How long are car leases?

Leasing can lower your monthly cost of living expenses

and Manhattan in New York City to
Staten Island
and upstate, New York has an extremely high
cost of living
, which includes pricey transportation costs. New Yorkers can anticipate spending about $400 per month on car expenses like gas, insurance, and maintenance—but leasing is cheaper than a car loan.
Cost reduction: A monthly car lease payment will typically cost significantly less than what you’ll pay per month for a car loan, especially if you find lease specials on a new vehicle.
Coverage for repairs: Leasing periods are often much shorter than loan financing periods. This means there’s a good chance any
car repairs
you might need will be covered under the manufacturer’s warranty (excluding excess wear).
MORE: How to refinance your auto lease

Leasing means no loss on depreciation 

It’s no secret that a car begins to lose its value the moment you drive it off the dealership lot. In some cases, by the time you’ve finished paying off your car loan your vehicle has little to no value. 
A new lease takes the depreciation off the table entirely.   
Closed-end leases are very straightforward. Once your lease is up, you simply give the car back to the dealer. You won’t have to worry about the depreciation of the car since you are not responsible for reselling a vehicle you never owned.
Key Takeaway: Leasing offers you flexibility and affordability to drive a car that suits your needs. 
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What to look for when leasing a car in New York 

Payment structure: Just like when you finance a car, leasing involves an upfront payment and then monthly payments made over the course of the leasing period. The purpose of paying off a loan is to take ownership of a car, but lease payments work differently. With a lease, you pay for the value the vehicle loses as you drive it. 
End of lease options: As mentioned, you can sign a closed-end lease—which generally means that you’ll return the vehicle at the end of the lease term. Or, a car dealer may offer you a lease agreement that gives you the option of purchasing the car at a lower sale price once the lease is up. 
Negotiation: Another reason why leases are known for their flexibility is the negotiation aspect. It’s likely that the dealership will be open to negotiating the lease terms—that’s why it’s so important to know the ins and outs of the process and shop around for the best lease deals.
Get to know the following terms before you sign a lease on your next car. 

Terms to know  

  • Capitalized cost: Also known as the “cap cost”, the capitalized cost is the amount of money that your monthly lease payments will be based on. Keep in mind that the cap cost may be the same as the manufacturer’s suggested retail price of the vehicle, but fees for service contracts, warranties, registration, and insurance will be stacked onto this figure. A lower cap cost will result in lower monthly payments. 
  • Money factor: Like a car loan, you should expect to pay interest on your monthly lease payments. This is known as the money factor—or rent charge. Experts advise that the money factor on a lease should fall around 0.0023, which translates to a rate of 5.5% or lower. Anything higher than 5.5% may not be a great deal. 
  • Mileage cap: In most cases, the dealership will put a mileage cap in the terms of your lease agreement. This is exactly what it sounds like—a limit to how many miles you can drive the leased vehicle each year. Failure to abide by the mileage cap could result in having to pay extra fees. 

Red flags to watch for 

Be cautious of a dealer who:
  • Tries to get you to sign a lease on your first visit
  • Is unwilling to negotiate the cap cost or money factor figures
  • Piles on a lot of extra fees to the expenses included in your cap cost
It never hurts to shop around for a lease contract. Make sure to get all the terms in writing before you sign any car lease deals. Even if you find the best car at a great price, don’t accept anything the first time you start shopping around!

How much should I expect to pay?

monthly cost to lease a new car (2022): $650
Bear in mind that the model and your zip code might impact your costs. For instance, a car leasing company may charge you less for a standard sedan like a Toyota or Honda in Long Island than a Lexus or BMW in the
in NYC.
Overall, a good rule of thumb is to try to keep your total car expenses at or below 20% of your monthly income. The best price depends on your monthly budget and how much you have to pay for parking. 
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