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Leasing 101

While not entirely common, you may find someone to purchase the vehicle at the end of your lease. There are heavy restrictions here, but it can be done.
This option allows you to simply return the vehicle and walk away. Your lease is complete, the contract is up, and you are free to go.
When your lease is up, you may decided to trade in your vehicle and sign paperwork to lease a new vehicle. New car every 3 years!
Also called "buyout," this option lets you finance, or outright purchase, the vehicle based on its residual value.
Keep: Trade:Return: Sell:
The typical lease runs its course over 3 years. Years 1 and 2, you are simply enjoying your new car. Towards the final months of your lease, you will be in contact with the dealership to determine which of the following options would be best for you when your lease ends.
Mileage: Your lease agreement specifies the total number of mile you can drive over the course of your lease. If you exceed those miles, you have to pay per mile. This can be a huge drawback if you travel. Own vs Lease: We'll cover this more in the next section.Damages: You must return the car to the dealership in the same condition you drove it off, except normal wear and tear. Well, "normal wear and tear" is legally ambiguous. If you lease a car, you are responsible for damages.
Lower Monthly Payment: Versus a traditional loan, your monthly lease payment will be less when compared with the loan payment of the same carFlexibility and Choices: At the end of your lease, you have options. If you love your car, buy it out. If you need a change, trade it in.New Car Every 3 Years: Especially now, technology in cars is advancing at an incredible rate. Cars that are 3 years old now have old technology.More Car - Less Money: Whether you want to get more features on the same car, or a more expensive care for the same price as a conventional loan of a cheaper car, you have more options when leasing.Warranty Covered: Since you are leasing a new car, your car will automatically be covered by the manufacturers warranty. If something goes south with your new car, it's probably covered unless it was your fault.

Monthly Payment: The amount of money you pay each month during your lease. Residual Value: The guaranteed value your car will be (estimated) worth at the end of your lease. Depriciation: This is the value the vehicle will lose over the term of your loan. This is ultimately what you pay for during your lease.Money Factor: ​The "interest rate" of your lease. You can calculate the associated interest rate by multiplying the money factor by 2400.