What is Leasing?

Signing a leasing contract means that you agree to make regular monthly payments, keep appropriate insurance, pay any vehicle taxes and licensing fees, and take good care of the vehicle. Further, you agree that you'll keep the car for a specified number of months — typically 24, 36, or 48 months — and you're expected to stick it out to the end. At the end of the lease you're expected to return your vehicle to the leasing company with no more than normal wear and tear. You'll have to pay for any damage or extra mileage over and above your contract-specified limits. You may have an option to purchase your vehicle at lease-end for a specified price, if you choose. Or you may be able to use the car as a trade-in on a new car. Otherwise, you can simply return the vehicle to the leasing company and walk away.

Lease vs. Buy?

The answer is – it depends. It's not possible to simply say that one is always better than the other because the answer depends on the specifics of each individual situation. Leases and purchase loans are simply two different methods of automobile financing. One finances the use of a vehicle; the other finances the purchase of a vehicle. Each has its own benefits and drawbacks. When making a 'lease or buy' decision you must look not only at financial comparisons but also at your own personal priorities — what's important to you. As an example, if you lease a $20,000 car that will have, say, an estimated resale value of $13,000 after 24 months, you pay for the $7000 difference (this is called depreciation), plus finance charges, plus possible fees.When you buy, you pay the entire $20,000, plus finance charges, plus possible fees. This is fundamentally why leasing offers significantly lower monthly payments than buying

Benefits of Leasing

Lower Monthly Payments Because you only pay for the portion of the car or truck that you actually use, your monthly payments are 30%-60% lower than for a purchase loan for the same car and same term. More Car, More Often Since your monthly payments are lower, you get more car for the same money and drive a new vehicle every two to four years, depending on the term length of your leases. Fewer Maintenance Headaches Most people like to lease for a term that coincides with the length of the manufacturer's warranty coverage so that if something goes wrong with the car, the repairs are always covered. No Used-Car Hassles With leasing, the headaches of selling a used car are eliminated. When your lease ends, you simply turn it back to the leasing company and walk away, unless you decide to buy it or trade it.