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Essentially, leasing is similar to renting — you make payments for the use of the car over a certain time period, and you return the car at the end of that period. Most likely, you will lease a car for 2-3 years and then have the option of buying the car or giving it back to the dealer.
Paying less over the long term. Monthly lease payments are generally less expensive than monthly car loan payments. ... Buying a vehicle and driving it for several years after you pay it off can be the cheapest way to own a car. The longer you drive it, the less it costs.
Paying less over the long term. Monthly lease payments are generally less expensive than monthly car loan payments. ... Buying a vehicle and driving it for several years after you pay it off can be the cheapest way to own a car. The longer you drive it, the less it costs.
Drawbacks of Leasing The biggest drawback of leasing is that you aren't building up any equity in your vehicle. ... If you can't do that, the lease rate will go up, or you'll be stuck paying expensive mileage penalties at the end of your lease. Drivers who lease will also have to take very good care of their leased cars.
Leasing Pros: You have lower monthly payments with a low or now down payment. You can drive a better car for less money. You have lower repair costs because you are under the vehicle's included factory warranty. Furthermore, you can more easily transition to a new car every two or three years.
Leases are certainly appealing in many ways. ... Many may dismiss leasing as a waste of money. And it's true, leasing a car is more expensive in the long run compared to buying one and paying it off. But for some car shoppers, it is the smarter choice.
Typically, if you were to purchase a new car, you would make a down payment and finance the remaining cost. ... Leasing is essentially renting, with your payment going towards the car's depreciation. If the lease includes a purchase option, you may buy it at the end of a specific time period.
The leased vehicle remains the property of the lessor -- the company that issued the lease. Today's car buyer has many choices when it comes to buying or renting a new car. As with an apartment rental contract, car leasing will have a fixed period -- typically two or three years.
Leasing a car can in many cases allow you to drive a new vehicle for less per month than you would with an auto purchase loan for the same car. But when the lease ends, you won't own the car unless your lease contract gives you the option to purchase the vehicle from the dealer.
Like a car loan, a lease is reported to your credit history, which builds your credit, he says. So even with no previous credit history at all, you'll have a FICO credit score after six months of reported payments. And with a lease, you're not stuck with the car forever, says Bartlett.
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