Questions to Ask Before Signing a Lease

Leasing an apartment or a car definitely has its benefits, depending on your stage of life and financial situation. Although fundamentally different, the most important questions can be applied to either kind of lease and should be asked before filling out any lease form.

Benefits of Leasing vs. Buying

When you buy property – like a house or a car – you pay for the entire cost, including taxes, down payments and finance charges. When you lease, however, you only pay for use of the property during a specific time period.

Choosing to lease can be a good alternative to buying depending on your priorities and stage of life.

• Convenience – A lease requires a limited commitment when it comes to where you live or what you drive. In our increasingly mobile society, the ability to make short-term commitments can be beneficial.

• Realistic Budget – Generally, lease payments are lower than monthly payments when buying a house or a car. For individuals just starting out in a new career, these lower lease payments can fit in more realistically in a tight budget.

• Short-term financial goals – “Leasing can be very helpful as people pay off debt, including student loans,” states Bill Wilson, a specialist in personal financial management and insurance in Portland, Oregon. Use the lower lease payments to pay off debt without getting into more long-term financial liability.

However, there are important considerations to review before signing any lease agreement. These five questions can help you figure out the details!

Question #1 – What Deposits are Required?

When leasing an apartment, townhouse, or duplex, it’s important to find out how much the security deposit will cost you. Security deposits can vary greatly depending on the landlord or real estate management company in charge of the property. A security deposit is usually required with a car lease, along with title and registration fees. Make sure to ask whether or not any portion of the security deposit will be refunded to you at the end of the lease.

Question #2 – Are Any Fees Refundable?

Along with the security deposit, there may be additional fees to pay when signing your lease. If there’s an application fee, ask if it can be used towards your first payment – this is especially common with rental property. There may also be cleaning or detailing fees, as well as a signing fee when you lease a car.

Question #3 – What is the Length of the Lease?

Leases are convenient because they’re short-term, but a longer lease may also be beneficial for your situation. When the lease is up on an apartment, for example, the monthly payment may increase dramatically. If it’s a good rate and you don’t mind living somewhere a little longer, consider signing up for a longer lease.

Question #4 – What Happens When the Lease Ends?

It’s important to know what kinds of financial obligations will be required once the lease ends. Will there be fees related to cleaning or detailing an apartment or a vehicle? Could you clean up anything on your own to try and save money at the end of the lease?

Question #5 – What Happens if I Need to Get Out of My Lease?

Your situation can change quickly, and it’s important to know your options should you need to get out of your lease. For rental property, you may have to pay a month’s rent or more to move out. For a car lease, you may need to pay an early termination fee.

Before Signing a Lease

These questions will help you figure out the details of your potential lease. However, here are a couple of tips to help before you head out!

• Know your credit score. “Many times a good credit score can help decrease the cost of applicable fees and deposits,” says Wilson. A property management company may put your application fee toward your first month’s rent, or you could negotiate a smaller security deposit based on your good credit score.

• Research special offers. If you have a place in mind where you’d like to live, call and see if they’re running any special move-in deals for new tenants. If you have a particular car in mind, wait until you find a special deal on a short-term lease before taking the plunge.

No matter what, make sure to ask as many questions as you need to in order to feel satisfied with the agreement you’re signing. It’s better to know as much as you can up front than to feel sorry about what you signed later!

Kelly Wilson is a busy mom and freelance writer who lives with her family in Portland, Oregon.