We Signed Our Lease Using a Credit Card. Here's Why

After driving the same car for more than 16 years, my husband and I made the decision this summer to get a new car. We knew the timing wasn't great given vehicle prices and interest rates, but our old car was starting to show its age and was no longer a good fit for our family (literally -- we could barely fit our family of five). 

We decided to go with a plug-in hybrid for the benefit of having a short range of distance we could drive without needing to use gas. The cost of the car was higher because of that, but we figured we'd make up some of that in the form of gas-related savings. 

Also, there are times in our busy schedules when heading over to a gas station becomes annoying. So being able to charge our car at home and get a good 30 to 40 miles of driving out of that was appealing.

However, since we've never had this type of car before, we decided to lease it rather than buy it. And like many people who lease, we were required to put money down. We used a credit card for that down payment, though, which made sense for a couple of reasons.

1. We figured we might as well get some cash back

My credit card offers cash back on all purchases, lease signings included. Now initially, we expected there to be an extra fee for putting our down payment on a credit card. But there wasn't. So we figured we might as well pocket some extra money.

Now to be fair, we only get 1% back on "general purchases" from our go-to credit card, and our lease down payment fell into that category. We get that same general 1% back on all of our credit cards, actually, so using our go-to option just made sense. But since we had to put down $2,500 on our lease, we got $25 back in the process. 

Because we have a fairly high spending limit on our go-to card, making this $2,500 charge wasn't an issue. And because we'd been saving for a new car, we were able to pay off the balance immediately, thereby avoiding interest or potential damage to our credit (which can happen if you rack up too high a credit card balance relative to your total spending limit). 

2. We wanted some protection

Many people who sign a lease drive away with their vehicle of choice at the time they make their down payment. But we weren't able to do that for one big reason -- our car wasn't available at the time of our signing. 

We were warned that it would be several months before our car became available. In the end, it came in about three months after we made our down payment, which was ahead of schedule.

Because we had no idea how long it would take for our car to actually arrive, we wanted some protection in case the six- to nine-month timetable we were quoted ended up getting pushed out. We were worried, for example, that we'd land in a situation where there was no update on our car a solid year after making our down payment. 

We figured that by using a credit card, we'd maybe have recourse if the dealership somehow tried to take our money and run with it. In reality, the chances of that happening weren't so high because we had a contract in place, but you never know. 

The average monthly lease payment this year is $487 per month, says Car and Driver. But because of the type of car we leased, our payments are higher than that. Putting our down payment on a credit card at least gave us a little money back to soften that blow -- though ultimately, the biggest savings are apt to come in the form of filling up our car pretty infrequently.