Leasing
Ownership: You don't own the vehicle. You get to use it but must return it at the end of the lease unless you decide to buy it.
Up-Front Costs: Typically includes the first month's payment, a refundable security deposit, a down payment, taxes, registration, and other fees.
Monthly Payments: Lease payments are usually lower than loan payments because you're paying only for the vehicle's depreciation during the lease term, plus interest charges (called rent charges), taxes, and fees.
Vehicle Return: You can return the vehicle at lease-end, pay any end-of-lease costs, and walk away.
Mileage: Most leases limit the number of miles you may drive, often 12,000 to 15,000 per year. (You can negotiate a higher mileage limit.) You'll have to pay charges for exceeding your limits.
Excessive Wear & Tear: Most leases hold you responsible. You'll have to pay extra charges for exceeding what is considered normal wear and tear.
Customizing: Because the lessor wants the vehicle returned in sellable condition, custom modifications or added parts you installed will need to be removed before you return the car. If there is any residual damage, you'll have to pay to have it fixed.
Early Termination: If you end the lease early, early-termination charges can be almost as costly as sticking with the contract.
End of Term: At the end of the lease (typically two to four years), you have to finance the purchase of the car, lease a new one, or buy another.
