How Do Car Leases Work?

When it comes to your first car, pondering on if it'd make sense financially to buy new or used cars, or even lease a car, makes perfect sense. It's a huge step in the world of being an adult and responsible human being. Before making any decisions, you'll want and need to understand the terms and conditions that come with leasing and purchasing a vehicle before you finalize anything. Doing your research and fully understanding what you're getting into can help you in the long run. Generally speaking, it's a better financial decision to buy a used car than buy newer cars or leasing cars when it comes down to overall numbers. Though it's not as desirable as you, buying a used car can save you money and get you into a car you want faster.

How do car leases work?

When it comes to leasing a car, most auto dealers require you make a down payment. This payment is like contributing a portion of the lease up front. You then make monthly payments on the remaining balance for the rest of the lease duration. These payments are typically lower than they would be if you purchased the vehicle. That's because you're only financing a portion of the car itself. The lease will likely have requirements you'll need to meet to avoid any additional charges at the end of the lease term - for example, most dealers limit mileage per year; typically between 10,000 - 15,000 miles. 

It differs from a car purchase in that you do not own the vehicle at the end of the term. When it comes to purchasing a car, you'll likely need an auto loan to assist with the financial burden that accompanies a car purchase. A lease is less expensive in that you aren't carrying the weight of a fully priced vehicle. 

Essentially, a car lease gives you the ability to drive a new vehicle without the requirement of paying large sums of cashing or by taking out an auto loan to supplement and assist the car purchase. To lease a car, it's usually a simple down payment - less than 20% the car's value - followed by monthly payments for the entire term and duration of the lease. When the term expires, you simply return the car. Read more about vehicle leasing from https://en.wikipedia.org/wiki/Vehicle_leasing.