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Asked by burcucopuroglu - 7 years ago
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jimbo Level 3
Answered 7 years ago
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With car leases, you pick out your car and the figure out how long you want to use the car. You then make an initial payment followed by monthly payments throughout the lease.

During this time, you don't own the car. The leasing company owns the car and they're renting it out to your for monthly payments. However, you still have to pay for the gas and insurance. Also, during the lease, you will have mileage limits with penalties for going over the limits.

At the end of the lease period, you then have a choice of returning the car, negotiating a new lease, or buying the car for the residual remaining value.

This is different from an auto loan. With an auto loan, you own the car but owe money to the bank. When you pay off the loan, you get to keep the car.

I would choose the lease option only if you like driving new cars. If you want to keep your car for more than 5+ years, get an auto loan. If you want to change cars every 3 years, get a lease. It will save you the hassle of selling your car and worrying about depreciation.
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