A car lease is an agreement that typically extends from a dealership to an individual or company and covers the borrowing, or lease, of at least one vehicle. Most lease agreements have very similar components: duration, fee, buyout, damage, and additional stipulations. Additional stipulations generally include proper maintenance, the inability of the lease-holder to modify the vehicle or vehicles being leased without the express permission of the leaseholder, and other terms and conditions that are required by law. Legal limits and conditions tend to include consideration for damages, lemon-vehicles, and other such considerations that are designed to protect all parties involved in a lease.
The duration of any lease is generally measured both in terms of time as well as in mileage. This means that a lease not only covers the length of time that the vehicle will be borrowed for, but the amount of usage on the vehicle during that duration. Most auto lease agreements lock the total number of miles that can be put on a vehicle on a per-month basis, but some lease agreements for businesses factor mileage on a per-quarter or per-annum basis. Most lease agreements for automobiles include penalties for vehicles that go over the allotted mileage during any period, but not all offer discounts for usage under the mileage limits. Additionally, few lease agreements allow miles to ‘roll over’ or carry on to the next month.
Paying a lease fee is akin to paying a rental fee in that the fee is only for borrowing the vehicle(s) and using it under the guidelines specified by the contract. While people that purchase a vehicle receive the vehicle at the end of the agreement, so long as they make all the payments on time, leased vehicles are returned to the dealership unless a buyout is arranged. A buyout generally gives the party leasing the vehicle or vehicles and option to buy the vehicles at a pre-determined price or a price that is determined by a pre-agreed method as stipulated by the lease agreement. Most lease payments are significantly lower than a comparable purchase agreement, but the lease agreement plus the purchase price do tend to be higher than the price of a simple purchase and finance arrangement.
Damage and/or excessive wear and tear to a vehicle need to be covered by the holder of the lease agreement in most cases. Even if damage is caused by a third party, such as an auto accident that is not the fault of the lease holder, the damage must be rectified in order to protect the dealership or company offering the lease.
- How to Get Out of a Car Lease Early?
- What Does it Mean to Lease a Car?
- How Does a Car Lease Work?
- What do you Need to Lease a Car?
- How Do You Lease a Car?
