With monthly payments of $100 or less, a low-payment lease deal might seem like the perfect solution for your teen who needs a car in high school or at college.

For a relatively low monthly payment, your teen can get a new car with at least some of the latest safety features, maximum reliability, a full warranty, and affordable monthly payments.

But regardless of who’s paying, consider carefully. Leases carry risks that can make them a costly choice for young people, especially if they don’t take care of the car. That’s because leases hold the lessee responsible for anything other than normal wear and tear to the vehicle. 

“The sticker shock will come at the end of the lease period if the teen has trashed the car,” says Jack Gillis, director of public affairs for the Consumer Federation of America and author of "The Car Book 2017."

Dings from minor fender benders, scratches from careless parking, and stains on the upholstery can cost you. 

A much cheaper and less risky approach is to have your teen buy a safe and reliable used vehicle, say Gillis and other car experts. (Check out the best used cars for teens.)

Low-monthly-payment lease offers are everywhere. For instance, Kia recently was offering a three-year lease on its 2017 Forte for $109 per month. A three-year lease on a 2017 Corolla LE was just $139. Like most low-monthly-payment leases, the deals required substantial up-front payments, almost $2,700 for the Forte and $1,900 for the Corolla, and they usually require really good credit.

Like a car loan, a lease is a way to finance a car, but the payments are much lower than they’d be for a loan for a car of equivalent value. That’s because with a loan, you’re paying for the entire vehicle, which you’ll own when you’ve paid the loan off.

But with a lease, you’re paying the amount of depreciation, the projected amount the car’s value will drop during the lease period, and you have to surrender the car at the end of the lease period.

With both financing arrangements, you’re also being charged interest, which typically is higher for a lease because you’re essentially borrowing the car’s value but paying back relatively little during the lease.

Considerations to Weigh

Think carefully before leasing a car for your teen, keeping these matters in mind:

  • The consequences of co-signing: If you put the lease in your name or co-sign the lease agreement, you’ll be responsible for any damage to the car that’s not covered by insurance, and if you need to make an insurance claim because of your teen’s carelessness, your rates could go up.
  • Insurance costs: Know that insuring a new car for a teen, whether it’s leased or purchased, can be expensive, a cost you’ll need to factor into your decision, says Bruce McClary, vice president of communications at the National Foundation for Credit Counseling.
  • Early termination: You’ll also be financially responsible if your teen decides she no longer wants or needs the car before the lease is over. Terminating a lease early can cost almost as much as leasing over the entire term, says Al Hearn, founder and president of LeaseGuide.com.
  • Life after lease: Remember also that when the lease is over, your teen won’t have a car—a complication if she’s just finishing college and needs transportation for that new job. If your teen leases yet another new car, the total cost of back-to-back leases can be thousands of dollars more than simply buying a new car and holding on to it until at least the loan is paid off, Gillis says. Buying a used car can save you even more, he says.

Get the Best Deal

If you decide to lease anyway, don’t assume that any deal you find online is the best offer out there. Start by asking the dealer to go over his top offers and then negotiate those, says Mel Yu, Consumer Reports automotive analyst. For instance, you should haggle on the vehicle price, just as if you were buying the car. You also can try negotiating such items as fees and the down payment, Yu says. And if your teen is heading off to college, check whether the automaker has a special deal for college students, he says.

Finally, make sure the number of miles the lease allows your teen to drive reflects how much she’ll actually use the car. If she drives more than the lease allows—12,000 miles a year for the Forte and Kia offers—she’ll be charged an over-mileage fee of around 15 to 20 cents per mile. If she drives too little, she or you will have paid for more depreciation under the lease than she actually used, Hearn says. If your teen needs more than the lease deal allows, Gillis says, try negotiating additional miles at no extra cost.