Think of a lease as a long–term rental agreement. Generally, the term runs from
24 – 48 months. The leasing company owns the vehicle. You pay them a fixed
monthly fee to drive the car. You pay for insurance (required minimum coverage
is higher than purchase finance contracts) and routine maintenance.
The vehicle’s warranty works just as if you owned the car. If you damage the
vehicle, you and your insurance company still have the responsibility to pay for
physical and property damages.
Unlike purchasing a vehicle, if you always lease, you will always be making
monthly payments. When you buy, the loan is paid off and your payments end
until you choose to buy again. Further, you can sell your vehicle and recover
some monies, or you can trade it in. When your lease ends, if you do not
exercise your purchase option (assuming you have one), you must lease again.
Hence an endless cycle of payments.
