What Exactly is Car Leasing?

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Author: Peter Ridgard

Peter Ridgard has been writing about the automotive industry since 2008. As such he has an unrivalled expertise in the area.

Are you thinking about getting a new car and aren't sure if you should lease or buy? This is a question that many struggle with when it comes time to replace their current vehicle. What exactly is car leasing and what do you need to know about it? Before you head out the door to shop for your new ride at the local Car Dealerships, you need to ensure you understand how the leasing process works.

When you buy a car from the local Car Dealerships, you obtain a loan through a bank or finance company. Payments are made to this lender for a period of time and, once all payments have been made, the car belongs to you. The payments may be spread out over a period of time, but the length of the loan in most cases ranges from three to seven years. When you lease a car, you lease it for a period of time ranging from one to three years and then return it to the company who owns the car. The residual value of the car at the time of turn in is approximately 50% of what it was new.

When you choose to take advantage of auto leasing through one of the local Car Dealerships, you can choose a car that you would normally not be able to afford. You can also upgrade your car on a regular basis without having to worry about selling it or trading it in. Many choose to do this if they feel they will need to upgrade their ride on a regular basis. Others do so in order to get their dream car at an affordable price.

Some have a negative impression of auto leasing through local Car Dealerships. When you go to obtain a lease, you need to ask about the annual interest you will be paying. Compare this to what you would pay for a new car to ensure this is the right option for you. In addition, you want to discuss the price of the car before the lease payments are calculated. You can and should negotiate the price of the lease. Why pay more than you have to just because you aren't buying the car outright? By taking these two steps, you can lease a car and be glad you did for the entire lease term.

Pete J Ridgard is a writer and a car enthusiast. He currently writes for the automotive industry.

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