How an Auto Lease Works
When you take out an auto lease from either a dealer or a financial institution, you are basically taking out a long term auto rental.
With a lease, you use the car for a pre-determined amount of time and pay for only the portion (lease term) of the car that you use. Because you are estimating how much and for how long you will be using this car, the lender is able to give you a lower monthly payment. However, if this estimation is exceeded once the lease term expires, you are required to pay a variety of additional costs.
When auto leases expire
Once a lease term expires, the lessee can either return it to the lender or buy it for a new price.
If the lessee returns the car, it will be inspected for excess wear. Excess wear can mean additional charges for you if repairs aren't made before turning in the car.
Typical leasing benefits
- Lower monthly payments
- Lower upfront costs
- Possible tax benefits
- Opportunity to drive a brand new car with the latest styling, safety and convenience features every two to three years.
- Avoids the hassles of trade-ins
Commonly asked leasing questions
- How is the car registered and taxed?
NWFCU can arrange registration and tags, however, the fees are the responsibility of the lessee. You are also responsible for any state license decals and state auto inspections. There is no sales tax on autos leased through the Credit Union, but if personal property taxes apply, NWFCU will bill you for the amount.
- What maintenance am I responsible for?
Routine maintenance and repairs that are not covered under the new vehicle warranty are your responsibility.
- What do I do if I am in an accident?
Contact your insurance company immediately and arrange for repairs. Contact the Credit Union's Auto Resource Branch to inform us of the accident. You will be responsible for making your monthly lease payments while the vehicle is being repaired. If the vehicle is totaled, your insurance company will make a settlement.
- What happens if I move?
NWFCU is licensed to lease in the following states: VA, MD, D.C., NC, TX, GA, FL, PA, WV, CO and CA. When moving to one of these states, you are responsible for transferring the tags and registration to that state. If, at the end of your lease, you decide not to purchase your vehicle, you must return it to NWFCU. If you move to a state that is not listed above, your lease must be terminated and you will need to purchase the vehicle, sell it, or turn it in to NWFCU.
- What is excess wear and tear?
The vehicle must be able to pass inspection and be in a condition which does not detract from its residual value. Some examples of excess wear and tear would be dents and scratches, cracked windows, missing parts, tears or burns in the upholstery, and negligence of routine maintenance.
- What happens if I exceed my mileage allowance?
There is a per-mile charge for every mile in excess of the allowance. This amount is due at the end of the lease.
We can help you decide
To help you determine whether a lease is right for you, contact our Auto Resources Department.
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