Consumer Protection

How to Protect Yourself: Car Leasing

Source: The Florida Attorney General's Office

Although lower monthly payments may make auto leasing appear to be an attractive alternative to financing the purchase of a car, the technical and complex language can cause car leasing to be an option that is fraught with pitfalls for the average consumer. The Florida Attorney General’s Office has received numerous complaints from consumers, many of whom have been pressured into auto leasing, have not been credited for their trade-in vehicle or have complained of being defrauded in other ways. Once you sign a lease, you have no automatic legal right to cancel. Before entering into an auto lease, consider the following:

What is a vehicle lease?

A lease is essentially a long-term rental agreement. You are paying for the right to drive someone else's vehicle for the term of the lease, but you do not own it. At the end of the lease, the car does not belong to you (but the lease may include an option to purchase the vehicle at the end of the agreement). In most instances, you will be responsible for all maintenance on the vehicle during the period of the lease, and your insurance rates will usually be higher.

Isn't a lease a good deal if my monthly payments are less than if I purchased the car with financing?

Not necessarily. The monthly payments should be significantly less because you don’t own the car. Your monthly payments are based upon the following items:

Capitalized Cost or “Cap Cost” – This is the amount of money that serves as the basis for calculating the amount of the payments under the lease agreement. The lower the cap cost, the lower your monthly payment. Cap cost may be the same as the sticker price, which is the manufacturer's suggested retail price (MSRP) of the car, but you can negotiate for a lower cap cost, so don't be afraid to shop around. The cap cost is increased by items such as insurance, taxes, registration fees, service contracts and extended warranties. The cap cost is reduced by the amount of cash or vehicle trade-in equity that you put into the deal that exceeds inception and acquisition fees. The correct amount of credit for your trade-in must be indicated in the lease agreement. If manufacturer rebates or dealer coupons are offered, such credits should also reduce the cap cost. Your total credits should be specified in the written lease agreement.

Money Factor – This is akin to the interest rate. The lower the money factor, the lower your monthly payment. The money factor will usually range from 0.0021 to 0.0046. Ask the dealer to put your money factor in writing then multiply it by 2,400 to calculate the interest rate. For example, a money factor of 0.002917 is the equivalent of a 7.00% interest rate (.002917 x 2,400 = 7.00). Remember that even the money factor is negotiable.

What else should I know about leasing?

The Motor Vehicle Lease Disclosure Act provides that all leases must meet certain requirements. You are entitled to copies of all documents which you sign during the course of the lease transaction, especially the lease contract which will contain several very important terms. The lease contract will be clearly marked as a lease and will list the price of the car or truck with any added options and costs. Your net trade-in value, cash or rebate will be listed as will the bottom line price of what you are leasing. It is important to review these disclosures carefully. Make sure that they reflect what you negotiated with the dealer.

You should be wary of:

  • Leasing a car on the first visit;
  • Relying on verbal promises made by agents or lease managers;
  • Giving the agent a deposit before you thoroughly read, understand and are satisfied with any completed lease agreement; and
  • Paying a lot of extra money for an extended service contract when your new car warranty will provide coverage for the major portion of the lease term.

File a complaint.

You may file a complaint against a car dealership with the Attorney General’s Office online at or by phone at 1-866-9-NO-SCAM. Additionally, you may file a complaint with the Federal Trade Commission online using their complaint assistant portal at You may also wish to file a complaint against the dealership with the Better Business Bureau online at