This is part of Glossary of terms for car buyers series breaks down all the terms you need to know if you buy a new one or old car from one authorized dealer.
Yours lease end, and you come back seller to return your car. You know it’s in good condition and you haven’t exceeded your mileage limit. But now you are required to pay $300 to $400 for something called a disposition fee. What the hell?
Great question. What is it? And why should I pay it?
You may not need to do so. But first, here’s what’s happening. The processing fee is a flat fee charged at the end lease by the rental company. It is intended to cover the cost of reselling the vehicle. It is almost inevitable.
Almost?
It’s correct. There are several ways to avoid this fee. For one, you can buy car because the residual value. Since you buy it immediately, there will be no resale costs and the fees will be waived.
The alternative is to make another lease from the same agent, a possible but unsafe way to avoid being charged. The rental company is making money from your car rental, so keeping you as a continuing tenant is in their best interest.
That seems simple enough. Is there anything else I need to worry about?
If you’re worried about fees at the end of your lease, make sure you really understand the mileage and excessive wear and tear parts of your lease. Read it carefully. These fees can add up! But if you’re leaving the lease, disposition fees are just part of the business.
Is there anything I can do to avoid dropping a few hundred dollars at the end of my lease?
The handling fee is usually non-negotiable, but you can ask for it. You can also pass it on to the capitalized cost of the car, increasing your monthly payment a bit but will hurt you more. You’ll pay interest on the fees you’ve moved in, but it won’t be insignificant…we’re talking $11 or so more dollars a month. If you don’t plan on buying or renting a new car, and you know in advance, moving fees into your lease may be right for you.
Thanks!
You bet.
