When the word lease is mentioned, most people think it is only about property but actually nowadays you can lease anything. You can even lease a good pair of wheels. So what exactly is a lease?
A lease is a legal document outlining the terms under which one party agrees to rent property from another party. A lease guarantees the lessee (the renter) use of an asset and guarantees the lessor (the property owner) regular payments from the lessee for a specified number of months or years. Both the lessee and the lessor must uphold the terms of the contract for the lease to remain valid.
Sourced from: http://www.investopedia.com/terms/l/lease.asp
Many people nowadays prefer leasing cars rather than buying one, which is seemingly a trend which is contradicting the traditional purchase-and-use in which customers had to get full possession of cars and pay for them in full. There are, however, a number of reasons leading to people switching to prefer leasing than bearing the burden of taking the ultimate care of a car, not to mention a few who want to go with the latest models as they come into the market.
Here are some popular reasons:
It’s less expensive: With the rising retail price of many of today’s cars, leasing is often the least expensive way to get a new vehicle. Leases tend to require lower down payments and lower monthly payments than car purchases. A lease is also a great way to get a nicer new car for less money than you’d have to pay to buy it.
There’s a lower cost of maintenance: Leases typically end before cars require major service or new tires, so maintenance costs are usually low. Leased vehicles are almost always under the original factory warranty, so owners don’t have to worry about the costs of repairs — as long as they are problems covered by the warranty.
You can have a new car every few years: Some people always want to be in the latest and greatest new car. Leases, typically for three years, offer a faster turnaround time than the standard purchase cycle, which is about six years. Leases are also easier to exit, once the lease term is complete. Assuming there are no over-mileage or excessive-damage charges, you can drop off the leased car and move on to whatever is next — which probably is another lease. This is a lot easier than buying a car with a long loan period, and tiring of the car before the loan is paid off — especially if you owe more on the car than what it is worth. That’s called being “upside down,” and it’s no fun.
As much as leasing is quite cheap than buying the car in full, the lease takes commitment and care in ensuring that the car you have leased is safe and in good condition, or else, you may end up paying more than you thought you owe the lessor. Avoid paying for the depreciation of a new car, drive a classy one at a cheaper budget, and have the company warranty cover the minor repairs for you, but remember to uphold your commitment to take care of the car all through.
Basically, a lease is a long-term rental agreement. If you always like to drive a new car, or if you don’t want to pay for the depreciation of a new car, a lease may be a good idea.
However, if you drive your cars hard or keep them until they fall apart, think again: leasing is not as simple as a making some payments and giving the car back.
Is leasing a car cheaper or advantageous over buying? Vehicle leasing options
Vehicle Leasing is better if you like to get a new car every 2 to 3 years, as it can lower your car payments or give you the opportunity to drive a more expensive car with a payment comparable to a less expensive car – i.e. a Lexus on a Toyota budget.