Leasing
Who owns the vehicle?
When you lease a vehicle you don't actually own it, you are paying for the use of it for an agreed upon number of months and miles. In leasing the lender is the one who owns the vehicle. That is why the monthly payments are generally lower when leasing versus financing.
What are the up-front costs?
Many leasing options don't require a down payment. Usually you pay for the first month, a security deposit and any applicable fees and taxes. You have the option of purchasing extra wear and tear coverage and GAP insurance to protect you, as well as more miles to make sure you don't exceed the limit. You also have the option of making a down payment (also called a "cap cost reduction"), which can lower the monthly payments and potentially give you more options when your lease ends.
How does the vehicle keep value?
Since you don't own the vehicle you are leasing, resale value isn't your concern. It is a concern of the financial institution however. When you sign a lease there is an expected residual value the vehicle will have by lease end. If you exceeded the agreed upon miles limit or has too much wear and tear it could affect the expected value and end up costing you at lease end. It is also possible to have "lease equity" at the end, which means the actual value of the vehicle is greater than the expected value. Having "lease equity" can give you more options at lease end.
Can I lease a used vehicle?
Yes. Though most people lease new vehicles, the same rules apply or leasing a used vehicle as a new one. In most cases if you want to lease a used vehicle it must be from the manufacturer's used vehicle program, like Subaru Certified Pre-Owned. It isn't always the best idea based on the numbers; because it is more difficult to determine the expected value of a used vehicle and financial institutions don't always want to lease a used vehicle, but leasing used is definitely an option that you can explore.
What happens when my lease is over?
The end of a lease presents you with a couple of options. Most people simply return the vehicle and start a new lease on something else. Some decide to purchase the vehicle outright at the end of a lease. Check out an in-depth lease end guide here.
What are the best vehicles to lease?
The best vehicles to lease are ones that hold their value the best. The less a vehicle depreciates during the lease term, the less you pay!
