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How Car Leasing Works

Leaseguide.com - Automobile leasing is based entirely on the concept that you pay for the amount by which a vehicle's value depreciates during the time you're driving it. Depreciation is the difference between a vehicle's original value and its value at lease-end (residual value), and is the primary factor that determines the cost of leasing.

If you consider two different cars, both costing $20,000 when new, where one is worth $15,000 after two years and the other worth only $12,000, the first car will cost less to lease because of its smaller depreciation amount.

Different makes and models of vehicles can have dramatically different depreciation rates. Those vehicles having the lowest depreciation make the best lease deals.

Generally, European and Japanese makes have lower depreciation than American brands. Honda, Toyota, and Volkswagen have consistently held low depreciation ratings, as has Mercedes, Lexus, and other luxury brands. See our Lease Kit for lease ratings on all makes/models vehicles, based on expected depreciation values.

Smart Automotive Leasing

A car lease is simply an agreement among the party or person who owns the car the lessor and the person or company who will use the car (leaser).

An agreement signed involving these two parties regulate the terms, and all conditions under which the car may be used and the obligation of each party.

For some people leasing is a good idea; it is certainly a good idea for the owners of leased vehicles who profit generally at a rate of about three times the list price of their vehicles.

Consumers sign their lease agreements with automobile dealers. However, there are other very solid options available for both leasing entity and consumers who would like to lease or even own a new car.