Leasing a Car in Vermont
For Vermont drivers looking to save money, leasing is a great option, but you’ll have to return the vehicle to the dealership at the end of the lease term.
Written by Jason Tushinski
Reviewed by Jessica Barrett
While leasing a car in Vermont is a great way to enjoy the benefits of owning a vehicle without most of the financial drawbacks, you’ll still need to negotiate your capitalized costs and monthly interest rate.
In the U.S., leasing a vehicle is becoming a much more common way of getting behind the wheel—in fact, one in four Americans now lease their cars.
If you’re mulling over whether to lease a car in the Green Mountain State, the
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Reviewed on 5/28/2023
Reasons to lease a car in Vermont
The average commute for Vermont drivers is 22.9 minutes, which is significantly less than the national average. Still, that works out to more than 40 minutes a day on the road, so having a reliable car—especially to get you through Vermont’s heavy winters—is vital.
If you’re saving both time and money as a Vermont commuter, leasing a vehicle instead of owning one is one way you can put more money back into your own pocket, in case of a rainy (or, in Vermont’s case, snowy) day. After all, if you lease your car, you’ll pay less per month on your lease payments than you would if you were financing a vehicle to own.
Still not convinced that leasing is the way to go, especially if you are keen on owning your own car? Consider the advantages.
Flexibility
When you lease a vehicle, you can negotiate the duration of your lease as well as the monthly payments you’ll be making. Once that lease is up? You can walk away from the vehicle, free of any related responsibilities.
Traditional auto financing plans put you on the road toward ownership, but there’s a giant ball-and-chain attached to that—the debt you’re locked into for years before you pay off your loan. By the time you own the vehicle, its value will have depreciated significantly.
Lower monthly cost
Leasing a vehicle in Vermont presents a unique opportunity to save money—you’d likely pay lower monthly fees than by financing and you can nicely combine those savings with what you might be already squirreling away thanks to Vermont’s affordable cost of living, especially in comparison to nearby New England and East Coast states.
In addition to lower monthly payments, you might be able to add some perks to your lease agreement that save you more money down the road. Dealers are often willing to negotiate and include extras such as covered maintenance over the lease term, winter mats, etc.
No loss on depreciation
When you lease a car, your monthly lease payments effectively pay for the car’s use during its best years. While owning a vehicle is enticing to many people, you’re stuck with a depreciating vehicle almost immediately after you drive it off the lot.
Driving a car on a lease won’t stop depreciation, but once your lease is up, you can walk away from the vehicle and that depreciating asset becomes someone else’s problem.
Key Takeaway When you lease a car, you’ll pay less in monthly fees than you would if financing the vehicle.
What to look for when leasing a car in Vermont
If you’re intent on leasing a car, you’ll need to be prepared before walking into a dealership in your quest for a great deal. Here are some terms you should know before heading out the door—and some red flags to keep an eye out for, as well.
Similar to taking out a loan to finance a vehicle, you’ll likely need to make an upfront payment along with mandatory monthly fees to cover leasing costs throughout the duration of the agreement.
With a closed-end lease, once your lease term is up, you’ll return the vehicle to the dealership and relinquish any financial or other responsibilities to the vehicle. If the car you’ve just finished leasing stole your heart, you can talk to the dealer about buying it outright if you’d like.
With a lease, many dealers are willing to negotiate, so don’t be shy about engaging in a bit of wheeling and dealing in order to get what you want. That being said, there are some terms you should know before starting lease negotiations. Also, keep an eye out for a few warning signs as well.
- Capitalized cost: Your cap costs are what your monthly lease payments are based upon. Cap costs are often based on the manufacturer's suggested retail price, but they can be inflated due to extra fees like registration costs, insurance fees, and service contracts. Feel free to ask your dealer to negotiate for lower cap costs, as this will reduce your monthly lease payments.
- Money factor: This term refers to the interest rate you’ll pay on the vehicle each month, but the money factor itself is not the interest payment. The money factor usually falls in a range between 0.0021 and 0.0046, which is then multiplied by 2.400 to come to your actual interest rate. Ideally, you want to keep your interest rate as low as possible.
- Mileage cap: Most lease agreements have mileage caps, which specify the number of miles you can drive per year on your lease. If you go over the allotted number of miles in a given year, you’ll be charged for each subsequent mile driven.
Red flags to watch for
In your search for the lease agreement that’s right for you, don’t take the first one offered. Shop around and, when you find the right deal, get the dealer to include any promises in writing in your agreement. Still, keep an eye out for the following red flags:
- You are pressured to sign a lease agreement on your first visit
- The dealer only wants to focus on monthly payments while skirting around the issues of negotiable cap costs or money factor
- The dealer tries to include any extra fees into your cap costs
How much should I expect to pay?
The average leaseholder paid $460 in monthly lease payments during 2020’s last quarter, according to
Statista
. You should aim for total lease expenditures around this amount. Overall, you don’t want monthly car expenses exceeding more than 20% of your monthly income.How to find affordable insurance for a leased car
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FAQs
How long is the average lease term?
The average lease term lasts 36 months, or three years. Before signing a lease, think about how long you want the vehicle, and whether you anticipate any employment or living situation changes that may impact your ability to meet your monthly lease obligations.
Is leasing a car a good idea?
It all depends on you—if you want a car to permanently call your own, financing may be a better solution. But if you want a reliable vehicle with lower monthly costs—not to mention being free of this obligation after a set amount of time—leasing may be a great idea for you.
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