Auto leasing school -> Car leasing 101 -> What is auto leasing

What is Auto Leasing?

What is auto leasing? Individuals have a few options to finance their vehicle, and leasing is one of those finance options growing in popularity. The concept of auto leasing is not as difficult as many consumers have been led to believe. The issue lays in the consumer not fully understanding the concept, and become nervous or skeptical to enter into a lease arrangement.

A lease is a binding legal agreement between two parties (individuals or companies), that outlines the specific terms and conditions of the lease agreement. When leasing a car, the lease agreement is not between the dealership and individual, but the leasing company and the individuals. The dealership where most individuals find and sign for their auto lease simply function as an agent to facilitate the auto lease arrangement.

So the vehicle you’re leasing is actually sold to the leasing company, who rents the automobile to you, the individual.

Consumers at times get the misconception that the whole deal with car leasing means you’ll be renting to own the vehicle. But this is not the case. You can of course have the option to buy-out the vehicle at the end of the lease term, or even take over a lease from another individual, but the consumer is not bound to buying out the vehicle at the end of the lease term.
When people discuss the concept of “what is auto leasing?”, there are a few areas that are typically overlooked that can be very advantageous to the individuals.
Leasing, or specifically auto leasing, is a well known finance option that’s been used for years. Individuals and businesses have been using the financing option of leasing for numerous other assets beyond just vehicles, such as buildings, businesses, equipment, etc.
The lack of information and knowledge the consumer has about auto leasing, can make it a scary venture into choosing auto leasing as an option for your vehicle. And this is why we’re here.

Leasing an Car

It's not difficult to understand how auto leasing works, though we'll get into that shortly. All you need to remember at this point is that auto leasing is simply a means to pay for your vehicle, whether it’s a Ford truck, Acura Legend, Honda Civic, Jeep, Harley Davidson or Kawasaki motorcycle, etc. It’s also commonly known as “purchase-repurchase” or “buyback”. You get a new or used vehicle for X number of months/years and your return it when your car lease agreement is done. It’s a great deal for you and the dealership. You get to “borrow” the vehicle for a monthly cost and upon return; the car dealer can sell the vehicle for slightly used.

Auto leasing is an option that lets you pay for the portion of a vehicle you expect to use over a specified term, plus a rent charge, taxes and fees.

Transfer an auto lease is vital when financial difficulties arise with an auto leasing consumer. Many consumers seek to get out of a lease due to financial hardship, divorce or separation, loss of a job or layoff. Many other reasons can lead to the need to transfer an auto lease. The prospective buyer who is seeking to take over a lease may offer a legal way out of an auto lease by transferring ownership of the lease agreement. Consumers should be aware that transferring a vehicle lease can vary between leasing companies. Specific information on terminating your car lease is available from your vehicle dealership.