How Much Does It Cost to Lease a Car?

If you’re in the market for a new vehicle, you have 2 main options when it comes to paying for it: buy or lease. Leasing is a popular choice because the monthly payments may seem more affordable than a loan payment. As of June 2025, the average lease payment is $659 a month, while the average car loan payment is slightly higher at $682 a month, according to Experian.

However, your monthly payment is just one piece of the leasing puzzle. “Many people focus on the monthly lease payment but overlook additional costs that can add up quickly,” says Kevin Wince, Vice President of Consumer Lending Servicing, Projects and Fraud at Navy Federal Credit Union. He says commonly overlooked expenses include the acquisition fee, the disposition fee, excess mileage charges, wear-and-tear penalties and occasionally, higher insurance premiums.

Once you know what to expect, you can plan your budget to factor in the hidden costs of leasing a car. That can help you decide if leasing is a good fit for your situation. 

 

 

What affects car leasing costs?

Much like buying a car, the sticker price is just a starting point. Your total leasing expenses will depend on several factors. Think about the following before you start shopping.

The car you choose

Luxury vehicles and popular models typically cost more to lease than basic models. If the vehicle you’re leasing has a higher resale value, then your monthly payment may be lower than other similar models.

Where you live

Some states charge sales tax on the full lease amount upfront. Others spread it over your monthly payments. Your location also can affect how much you’ll pay for vehicle registration and insurance.

Your driving habits

Estimate your annual mileage honestly to ensure your lease fits your driving habits—and to avoid excess mileage fees. Most leases include 10,000 to 15,000 miles per year. If you drive more than the limit in your lease, you’ll end up paying extra fees. If you really want to lease, you could buy extra miles upfront. That might be cheaper than paying a penalty later.

The vehicle’s condition

Normal wear and tear is expected over the course of a lease, but damage beyond that will cost you at the end. Consider whether you have pets, kids or a long commute that might be tough on the vehicle.

Your future plans

If there’s a chance you’ll need to end your lease early, you’ll need to factor in early termination fees to your total cost. 

“Life happens. Maybe you land a new job, move farther from the city to buy a bigger home or even pick up a new hobby,” Wince says. “These shifts can change your personal and financial landscape, so it’s worth considering how flexible your vehicle choice is in supporting your evolving goals.”

Upfront costs: Down payment, lease fees and more

When you lease a car, you’ll need money upfront before you drive off the lot. This is called the “amount due at signing.” It usually covers your first month’s payment, a security deposit, taxes, registration fees and any dealer fees. 

Here’s how it breaks down.

Down payment

You don’t need to put money down on a lease beyond what’s required. In fact, you generally shouldn’t because you’re not building equity in the vehicle. If you want to reduce your monthly payment, focus on negotiating the vehicle’s lease price instead.

First month’s payment

Most leases require you to pay your first month upfront. For example, if your monthly payment is $625, then $625 would be due when you sign the lease.

Security deposit

Some leases require a refundable security deposit, usually equal to your monthly payment rounded up to the nearest $50. For example, if your monthly payment is $625, then your security deposit would be $650. You can expect to get this money back at the end of your lease if there are no excess wear or unpaid fees due.

Acquisition fee

Think of this as a one-time processing fee for the leasing company to set up your lease. It typically runs from $600 to nearly $1,000 and is usually rolled into your monthly payments rather than paid upfront.

Taxes, registration and dealer fees

You’ll pay sales tax on your lease (either upfront or monthly, depending on your state), registration fees and various dealer charges like documentation fees. These can add a few hundred dollars to your amount due at signing.

The total amount of money you’ll need upfront varies widely based on the car you choose and the deal you negotiate. Pay close attention to the costs outlined in your lease agreement before you sign so you can budget for how much money you’ll owe upfront. For most mainstream vehicles, you might expect to pay over $1,000 at signing.

 

 

Monthly expenses: Lease payments and other costs

Once you drive off the lot, you’ll have ongoing monthly costs to consider. Here’s what to budget for each month.

Your lease payment

This is the monthly amount you agree to when signing your lease. You’ll be making payments each month throughout the lease term. This payment covers the car’s depreciation during your lease term, plus interest and any taxes rolled into monthly payments. Keep in mind that these payments don’t build any equity in the vehicle.

Full coverage insurance

Leasing companies require comprehensive and collision coverage with higher limits than you might have on a car you own. Your auto insurance costs can be influenced by several factors, including where you live, your age, your driving record, your credit score and the type of vehicle you’re leasing. Expect to pay about $110 to $200 per month for full insurance coverage with high liability limits.

Gas and maintenance

You’ll fill up the tank with gasoline, just like any car owner. You’re usually responsible for routine maintenance costs like oil changes, tire rotations and brake pads during your lease. It’s smart to budget $50 to $150 per month, depending on your driving habits. Most leased vehicles are under warranty, so major repairs are typically covered.

Wince and Racca both recommend finding out whether GAP insurance is included or required in the lease contract. If it’s required but not included, that’s another expense you’ll need to budget for. Also, make sure you know what’s covered under the car’s warranty.

Your monthly lease payment will stay the same for your entire lease term, which makes it easy to budget. Be sure to factor in these additional monthly costs when deciding if leasing is the best fit for your financial situation.

End-of-lease costs: Disposition fee, overage fees and early termination fees

When your lease period ends and the contract expires, you’ll need to decide if you want to buy the vehicle you’ve been driving or return it. Here are the fees you might face at the end of your auto lease term.

Disposition fee

This covers the leasing company’s costs to inspect, clean and resell the vehicle you return. Most leases include a disposition fee that’s about $400. You can usually avoid this fee if you lease another car from the same company or buy out your current lease.

Excess mileage fees

If you went over the mileage limit that’s spelled out in your lease, you’ll pay for every extra mile. Most leasing companies charge 15 to 25 cents per mile you drive over your lease’s limit. For example, if you end up driving 15,000 miles on lease with a 12,000-mile annual limit, you might pay $450 to $750 in overage fees for those 3,000 extra miles.

Wear and tear fees

Normal wear and tear is expected and covered. Damage beyond normal use will cost you. Large dents, long scratches, interior stains or bald tires could result in charges ranging from a few hundred dollars for minor fixes to a few thousand dollars for significant damage.

Early lease termination costs

If you need to end your lease early, you’ll typically pay the remaining lease payments or a percentage of them, plus a termination fee. This could be thousands of dollars, so consider a lease transfer if you need to get out early.

The key is to take good care of your leased vehicle. Regular maintenance, careful driving and prompt attention to any damage can help you avoid additional fees at the end of your lease.

 

 

6 tips to reduce your car leasing costs

Smart shopping and planning can save you hundreds—or even thousands—of dollars on your car lease. Try these tips to find the best deal possible.

1. Shop around for the best lease payment terms

Don’t settle for the first offer. Get lease quotes from multiple dealers, even for the same car. Compare the monthly lease payments and the total cost over the lease term, including all fees and down payments.

2. Negotiate like you’re buying

You can negotiate the vehicle’s lease price (also called the “capitalized cost”). A lower vehicle price means lower monthly payments. You can also try to negotiate leasing fees, although acquisition fees aren’t usually negotiable.

3. Be realistic about your mileage

Estimate your annual driving honestly. If you typically drive 15,000 miles a year, don’t sign a 10,000-mile lease. You might save a few dollars on your monthly payments, but you could end up paying several thousand dollars in excess mileage fees at the end of your lease.

4. Shop at the right time

Look for leasing deals at the end of the model year. Car dealerships may offer better incentives to move older inventory to make room for the newer models. Leasing companies often have monthly quotas, so you might find good deals when you shop for cars at the end of the month.

5. Read the fine print

Understand every fee and restriction before you sign the lease document. Ask about wear-and-tear guidelines, early termination policies and what happens if you need to move to a different state during your lease term.

6. Consider a lease buyout

If you love your car and it’s worth more than the buyout price at lease end, a lease buyout can be a smart move. You can avoid disposition fees, and you’ll get to keep a car you already know and trust.

The true cost of leasing a vehicle goes beyond your monthly payment. “You’ll need to budget for insurance, GAP coverage, regular maintenance and any fees at the beginning or end of the lease,” Racca says. “Some leases include maintenance, but not all do, so ask about that upfront. The goal is to make sure the total cost fits comfortably in your budget, and that you’re not stretching yourself too thin.”

 

 

Comparing car leasing vs. buying

Still deciding whether to lease or buy your next vehicle? The best choice for you depends on your situation and personal preferences. 

Here’s a quick way to compare leasing and buying:

• Leasing can offer lower monthly payments and the convenience of driving a newer car, and repairs may be covered by a warranty during the lease term. You’ll be making payments and paying fees, but you’re putting money into something you won’t get to keep.
• Buying a car could mean higher monthly payments and repair bills after the warranty expires. On the plus side, you’ll have equity in an asset you own once the loan is paid off. You also won’t have any mileage restrictions, so you can drive as much as you like.

 

Whether you lease or buy, we’re here to help

Navy Federal has resources to support your auto-related decision. For more guidance on managing your car expenses, check out our budgeting basics to help fit your transportation costs into your overall financial plan. You can also explore our auto education resources for more tips on buying, financing and maintaining your vehicle. If you choose to buy instead of lease, we offer competitive auto loans^{Footnote 1} with flexible terms.