Auto Lease is an agreement that allows an individual to rent a vehicle for a certain period of time, without having to buy it entirely. Auto leasing is similar to renting a house because the ownership doesn’t change, just the user does. One gets access to the automobile they have leased for the agreed upon period. At the end of it, they can either return it or buy it.
Auto leases determine the monthly payment for the car one has leased for the lease period and the penalties for not paying the lease are mentioned. Some terms and conditions generally mentioned in auto leasing are penalties for any damage or customization done to the vehicle and overuse of the vehicle in terms of mileage. This may cause additional charge.
- Low hassle: more often than not, the lessee doesn’t have to pay any sort of down payment for leasing their vehicle. They just have to give the monthly payments.
- Less monthly fees: Auto leases are less expensive than auto loans.
- Owning the current model: Because one leases a vehicle for a relatively short duration, they can ensure they always have the latest model without buying it.
- Less cost effective than buying: One may certainly get attracted by the low monthly payments for an auto lease, but when added up, they prove to be more expensive than when one pays for the car outright. One also doesn’t get ownership over the car, no matter how many months they lease it for.
- Mileage limits: Most auto leases put a cap on the number of miles a car can be driven while in the possession of the lessee and then charge for extra miles.
- Responsibility: You are responsible for the condition of the car at the time of return.