What Is a Car Lease Disposition Fee?

Dealerships and leasing companies charge a car lease disposition fee at the end of a lease. This particular lease-end fee covers the expenses incurred by the leasing company in preparing the car you just returned for sale. Even the best car leasing deals incorporate disposition fees, though you can negotiate and reduce this lease-end cost. 

Fees incorporated into the lease disposition fee include: 

• Detail costs, including interior and exterior cleaning
• Inspection fees
• Transportation costs, if any

The car lease disposition fee, also known as a “vehicle turn-in fee,” varies depending on which vehicle you lease and what your lease agreement states. The leasing company typically predetermines disposition fees. More expensive brands tend to have a higher disposition fee. However, disposition fee totals also vary based on your city, state, and county. 

Some leasing companies deduct the disposition fee from your security deposit. This arrangement can make it easier to budget for the disposition fee at the end of a lease. However, you may still owe additional fees if your security deposit doesn’t cover the disposition fee and any excess mileage or wear and tear fees you owe. 

Lease disposition fees vary from $200 to upward of $500. A good rule of thumb is to budget for a disposition fee equal to one month’s lease payment. Most leasing companies refrain from publishing the lease disposition fee, so you must ask about it before signing the lease agreement. Many people only consider what is due at signing when leasing a car, but asking about this fee beforehand can help you make the necessary adjustments to your budget. 

Additional lease fees include: 

• Documentation fees
• Acquisition fee
• Dealer add-ons
• Down payment
• Early termination fees
• Excess mileage or wear and tear fees
• Security deposit 
• Taxes

Budgeting for these lease fees can lower the monthly payment you can afford. However, it’s best to account for these fees and then negotiate the ones you can to put yourself in a better position. Stretching your budget to fit your monthly payment without considering the extra costs can have you asking what to do if you can’t afford your car lease payments anymore.

It’s a good idea to ask about the amount of a lease disposition fee before you sign the lease. If you can get ahead of it, you may be able to ask to waive it or negotiate it down. Many lessees approach this discussion by making the disposition fee a “dealbreaker” point, often with varied success. However, you should also know that there are two ways to avoid a car lease disposition fee without negotiating. 

The first way to waive the disposition fee is to re-lease with the same company. It’s critical to understand that you’ll still owe a disposition fee on the new lease once it terminates, but you can put off that expense until later. The second method for avoiding the disposition fee is to purchase the leased vehicle. Instead of a disposition fee, you may pay additional fees to drive your lease home again. 

Can you negotiate the disposition fee on a lease?

You can negotiate the disposition fee on a lease. The most successful negotiators do away with the disposition fee completely, but sometimes, the disposition fee can show up on the lease agreement in other ways. A few extra hundred dollars for the security deposit or a higher money factor may be the trade-off for negotiating away the disposition fee. 

Should you fail to pay the disposition fee, the leasing company can take legal action against you. Many dealerships require a security deposit to be paid at the beginning of a lease because they know what happens at the end of a car lease. Any fees assessed upon the car's return come from the security deposit first since the dealership possesses that money for this very reason. 

Remember that you’re legally obligated to pay the lease disposition fee if you signed the lease agreement. It’s one of the many terms you agreed to. It’s often easy to overlook the disposition fee because it’s not part of how lease payments are calculated, but it’s still a cost. It’s essential to look at the entire cost of a lease before you sign a lease agreement to know what additional expenses come with it.  

Leasing your next car can help you put what you’ve learned about car lease disposition fees into practice. When you lease a new car, here are the steps to achieve a more affordable and satisfactory outcome.

1. Research car lease deals

Finding an excellent car lease deal that fits your budget and needs requires digging into the nitty-gritty. Compare money factors, security deposit requirements, and available terms for each lease deal. If you don’t already know, find out the residual value on a car leaseand how it can affect your monthly payment. 

2. Subscribe to FINN instead 

Researching, haggling, and maintaining a car lease can be exhausting. If you’re looking for an easier way to solve your transportation problem in the short term, consider a FINN car subscription. FINN’s car subscriptions let you pick between cars, trucks, SUVs, and electric vehicles to test drive a model, enjoy a larger vehicle in the winter months, or just spice things up. With transparent terms and affordable pricing, it’s a no-brainer when it comes to leasing vs. buying vs. subscribing. 

3. Negotiate your lease agreement 

Narrowing possible lease deals down requires putting boots on the ground and investigating what agreements dealerships and leasing companies are willing to sign off on. Before you enter the showroom, know what kind of deal you’re looking for. Don’t be afraid to leave if you’re not making any headway because there are leasing companies out there willing to work with you. 

4. Maintain your car lease

Once you sign a lease agreement to your liking, the work isn’t over. Fulfilling the lease terms means submitting your monthly payment on time, keeping up on scheduled maintenance, and ensuring the car remains in tip-top shape. You may be held financially responsible if the car sustains any accidents, dings, dents, or scratches during the lease term. 

5. Return your lease  

Driving back to the dealership with your leased car can feel bittersweet, especially if you like driving the car. Upon returning the lease, you typically expect to receive your security deposit back and move forward with the next step you’ve chosen, whether leasing another vehicle, purchasing your lease or another vehicle, or walking away. Before you make any move, you’ll need to cover the disposition fee and any other fees you’ve incurred.