Car lease incentives: What you need to know
Quick insights
- Car lease incentives can help lower the cost of leasing a vehicle through lower monthly payments, lower interest rates or cash back.
- There are various types of car lease incentives, from loyalty programs, residual values and more.
- You may want to consider the terms before accepting a car lease incentive so that you are well-prepared to make your monthly payments and avoid surprises down the line.
Thinking about leasing a car but need a little more motivation? You may consider looking into lease incentives, which are benefits offered by manufacturers or dealers to help entice customers to lease a vehicle. These incentives can come in several forms. Let’s review them in more detail below.
What are car lease incentives?
Car lease incentives (benefits provided by a manufacturer or dealer) are typically used to help lease slower-selling models or to compete with offers from other manufacturers. Manufacturers and dealers may offer car lease incentives in the form of cash back, lower monthly payments or reduced interest rates, among other things. Generally, these incentives can reduce the cost of leasing a vehicle, but it's important to understand the terms and conditions before accepting the incentive.
Types of car lease incentives
There are various types of lease incentives, but they generally are broken down into the following categories:
- Cash back incentives: These provide a lump sum of money back to the lessee, which can be used to reduce the initial down payment or the monthly lease payments.
- Reduced interest rates: Some lease incentives involve lowering the interest rate on the lease, which can result in savings over the lease term and lower monthly payments.
- Loyalty programs: Being a loyal customer could result in some benefits. For example, if you leased a certain brand or model from a dealership, you could be incentivized with better terms to lease the same brand of car as the one you’ve leased before.
- Residual values: A car may be leased at its residual value, which is the estimated amount of how much a car is worth once the lease ends. The leaser may increase the residual value to lower monthly lease payments for the lease.
Benefits of car lease incentives</h2>
Some benefits of car lease incentives could potentially include, but are not limited to:
- Lower upfront costs and reduced down payment
- Lower monthly payments, whether through lower interest rates or providing cash back
- Potential for savings over the duration of the lease term
- Potential for lower interest rates
Cons of car lease incentives
Some cons of car lease incentives could include, but are not limited to:
- Limited availability, as these incentives may only be available for certain models or during certain timeframes.
- Potential for balloon payments—where you pay a higher one-time payment towards the end of your lease—which could strain your budget.
- Some states may require you to pay full price before applying the incentive for tax reasons.
- Potential negative impact on resale value; for example, if the vehicle has a high mileage allowance, this could reduce the resale value.
In conclusion
On your journey towards leasing a car, you may come across some incentives. These could help you save over the term of the loan or lower your overall costs to lease the car. Remember to read the terms of any loan you apply for and make sure you are aware of what the incentives mean and how you may be able to benefit from them.
