How does a car lease work?
In car leasing, you make payments to have a car for a definite time period. After the lease period is over you return the car.An option for leased cars is when the lease expires they can buy the car that has been leased. Many people like leasing because they can have newer model cars, and lease payments can be cheaper than regular to own payments. A disadvantage is that leased cars are allowed a certain number of miles per year, anything over that amount results in a charge.
Most people think they are leasing from a car dealership, in reality you are leasing it from a leasing company. The dealership sells the car to the leasing company, who then lease it to the consumer under the terms agreed upon between the consumer and the dealer. These terms include the capitalized cost, the monthly payments, the length of the lease and the interest rate. Webster’s Dictionary defines a lease as “a contract by which one conveys real estate, equipment, or facilities for a specified term and for a specified rent.” In other words, a car lease is a fancy way of saying you will be renting a car. But not like the typical car rental. With a car lease you are paying monthly installments, which will reflect an interest rate as well as the depreciation of the value of the car you are leasing.
