Understanding What Car Leasing Means

Car leasing is an important decision for individuals and businesses looking for transportation. You should know that there is a big difference between leasing and renting a vehicle, because leasing is done for a period of a year and above, while renting is often for a couple of hours or several days.

It is a great responsibility to lease a car as you will be required at the end of the year, or whichever period of agreement, either to return the vehicle to the leasing company, or to purchase it. Lease cars are charged according to the number of miles you cover with the vehicle, which is limited to between 12,000 and 15,000 miles per year. Any miles that you use above the limit will be charged to you.

Apart from the mileage, car leasing companies also specify the amount of wear and tear that their vehicle will incur while you have it. This means that you should take the best care of your vehicle as you can, and always ensure that it is well covered by insurance. Any additional wear and tear will be charged as well.

It may seem like a strict way of getting a car, but it is so for several reasons. First, leasing companies get their vehicles from dealerships. The dealership gets commissions for each car that has been leased out, so they are also making money from your agreement. Secondly, vehicles depreciate over time and this is an additional cost for the leasing company. This cost should be covered by the end of the contract, which is why you may find that by the end of your lease, you may have paid slightly more than you would have if you had bought the car. Also, you can opt to buy the car at the end of the lease period, which is an additional profit for the company and dealerships.

So before you engage in vehicle leasing, make sure that you can afford it and that you understand the terms of the lease clearly. You also have to check the long term benefits of leasing a car as opposed to buying or renting.