what is leasing a car

Car leasing is a financing agreement where a person pays to drive a car for a fixed period of time at an agreed amount of money for the lease. When leasing a car, the lessee makes monthly payments to be able to drive the car, based on the cars projected depreciation value over the course of the lease term. At the end of the lease, the lessee returns the car to the dealership, and has nothing else to pay. Unlike buying a car, the lessee does not own the car when leasing it. Leasing a car has many benefits, such as lower monthly payments than a car loan, the ability to drive a new car every few years, and fewer out-of-pocket repairs and maintenance costs since leased new cars are almost always under factory warranty. However, leasing may be more expensive than an auto loan in the long run, and the lessee does not build equity in the car. It is important to compare the pros and cons of leasing versus buying a car to determine which option is better for an individuals financial situation.