What a lease disposition fee is — and how to avoid it

At the end of your lease, you can return the vehicle — and you will likely be charged a lease disposition fee. This charge is assessed by the leasing company and covers the cost of preparing the car for the next driver.

That said, you may be able to avoid paying it through negotiation or by buying the car.

What is a disposition fee?

A lease disposition fee is typically around $350, according to Kelley Blue Book. The make and model of the vehicle, the dealership and your location all influence the actual cost of a disposition fee.

Leasing companies charge a disposition fee to cover the cost of cleaning up and repurposing your old car for resale. The disposition fee, or turn-in fee, is one of many costs that may come as a surprise if you haven’t had a lease before.

It is separate from your monthly payment but may be charged with other types of fees, like early termination charges, excessive mileage charges and excessive wear-and-tear charges.

Do you have to pay the disposition fee?

If a disposition fee is included in your lease agreement, you can avoid it by purchasing your vehicle or signing another lease — or negotiating for its removal before you sign.

• Purchase your leased vehicle: You can buy your leased vehicle if your contract includes a purchase option. If you buy it, the leasing company may choose not to charge you a disposition fee since it doesn’t have to prepare the car for another buyer.
• Sign another lease: If you sign another lease with the same car dealership or leasing company, it may automatically waive the disposition fee. Otherwise, you can negotiate a fee waiver when structuring the new lease agreement.
• Check the contract before you sign: If there is a disposition fee in your contract, ask for it to be waived and removed from your lease agreement. The leasing company may not agree — but it’s worth a shot.

Other auto leasing fees to look out for

A lease disposition fee isn’t the only charge you could expect to face when you determine how much a car lease costs. Look out for other fees, including:

• Excessive mileage: If you go over the mileage you’re allotted in your lease, you’ll have to pay an excessive mileage fee.
• Wear-and-tear: If your car has some major dings, scratches or stains, you could face this charge based on the cost of the repairs.
• Early termination fee: If you return your lease before your term expires, you could end up paying extra to get out of your contract.
• Purchase option charge: Some dealerships may have a fee if you decide to buy the car once your lease ends.
• Acquisition fee: The acquisition fee covers the leasing company’s administrative expenses for initiating or originating the lease. This fee can be $595 to $1095, according to data from Edmunds.

Not all fees are charged or required with a lease agreement. It’s important to review your contract and ask any questions before signing. You may even be able to negotiate your lease to lower or remove them entirely, but you should still count on paying a few additional fees when you lease a car.

The bottom line

Before you lease a vehicle, read the fine print to ensure you’re not caught off guard by any unexpected fees or expenses. As you read the lease agreement, be on the lookout for a disposition fee.

If you don’t want to pay, ask for the lease disposition fee to be waived before signing the contract. Alternatively, you could avoid paying it by agreeing to a new lease or purchasing the vehicle at the end of your lease. If you opt for a lease buyout, shop around first to be sure you’re getting the best auto loan rates possible.