Complete Guide to Leasing a Car in 2025

You have two main options for getting a car: leasing or buying. Whether you pay for it in full or finance it through an auto loan, buying a car means you own the vehicle. Leasing a car is essentially a long-term rental, ranging from two to five years. You’ll return the vehicle at the end of your lease terms — you don’t own the car. 

Since you don’t technically own the car, leasing offers a way to meet your transportation more affordably. Monthly car payments are usually cheaper for leasing compared to buying, but it comes down to multiple factors, including:

• The type of car you’re getting

• Your down payment

• Your credit score and history, which determines your interest rate

• If you have a car to trade in

• Your insurance company and vehicle coverage

• Leasing terms and where you’re getting your car from

A car lease also has different responsibilities than owning a car. For instance, you’re on the hook for maintenance and upkeep on a vehicle you own. In some lease agreements, you can get regular maintenance included in your package or as a free add-on. 

If you’re paying more than you can afford on your car loan, lower your monthly payments by refinancing. Caribou can help you figure out if you’re eligible and help you save on auto loan payments.

Once you’ve found a car, you’ll start the paperwork with the car dealership or leasing company for your lease agreement. 

1. Find the right car. Your new vehicle isn’t just one that looks nice. It has to check off the boxes based on you and your family’s needs. Think about the entire experience of having a car and what you expect out of it.

2. Calculate the leasing terms. Leasing terms include how long you’ll have the car, monthly payment amounts, rules and fees if you miss a payment, and how monthly amounts are calculated. Terms also include the number of miles you’re allowed to drive per year and how many you can have by the end of your loan terms. If you go over that number, you’ll pay a fee. 

3. Get an interest rate. Your interest rate comes from your credit score and history. A higher score means a lower interest rate, while a lower score means a higher one. Your credit score tells dealerships how responsible you are with borrowing. If you can’t get the best deal on your own, you may want to find a cosigner.

4. Find a cosigner (if you need it). If your leasing terms don’t work, look for other options, including getting a cosigner. This person signs onto your lease agreement with you and is just as responsible for the vehicle as you are. If you don’t make payments on your car, your credit score will plummet, and so will your cosigner’s. Your cosigner should be someone with good or excellent credit and can vouch for you as a responsible borrower.

5. Negotiate extras. Some leasing companies or car dealerships offer maintenance packages for your car. Sometimes it’s an additional monthly charge, but it covers regular maintenance and upkeep on your vehicle. You can usually opt out, but you’re on the hook for those maintenance costs in full when it’s time to get work done. See what other incentives and special leasing programs are available, too.

6. Haggle pricing. You can negotiate the price of anything, including a car lease. Just because that’s the price the dealership has set doesn’t mean it’s the final price. Talk with your dealer or leasing company about the cost and do the math to see if it’s in line with what you can afford every month. If it isn’t, don’t be afraid to walk away until you find a place and vehicle that’s the right fit. 

Once you’ve found the car and set your leasing terms, you’ll sign your agreement, add your vehicle to your auto insurance, and drive off. When your loan terms are coming up, the leasing company will contact you with instructions on returning your car. Depending on your lease agreement, you might have an option to purchase your lease outright, including the cost of buying your car. Contact your dealership to find out how to return your lease.

The cost of a car is much more than the sticker price tag. It helps to use a leasing calculator to figure out both the monthly payments and the total cost of your lease. Let’s say the price tag on your potential car is $45,000. Maybe you need a car right away and don’t have anything saved. If you don’t have a down payment or anything to trade in, here’s what you could expect to pay based on different credit scores, interest rates, and leasing terms.

Having excellent credit can be a significant differentiator in how much you pay by the end of your loan. While those with bad credit can get a lower monthly payment with longer terms, they will pay nearly $36,000 more than those with excellent credit when the terms are up.