How Does Leasing A Car Actually Work?

by | Oct 20, 2016 | Ez Auto Blog

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Although not all consumers have leased a car, the greatest majority are certainly aware of the practice and the fact that leasing often results in lower monthly payments. However, many consumers don’t really know how a car lease in Lockport works.

It would be misleading to say that leasing a car is somewhat like renting, actually leasing a car is another way to finance a vehicle but rather than pay for the future purchase of the car, when you lease you are actually paying for the use of the car. The use of the car includes the depreciation which is the loss in value during the term of the lease, any excess mileage as well as excessive wear and tear.

There is still a finance charge:

When you finance the purchase of a vehicle there is a finance charge, this is the interest you pay on the loan. There is a finance charge to pay when you lease as well because the leasing company buys the car from the dealer and then they lease it to you. From a car dealer’s point of view a car lease in Lockport is no different than a normal straight sale.

When you use a loan to purchase a vehicle a portion of the monthly repayment goes towards the principal and a portion goes to paying the interest on the loan. When you lease a car a portion of the monthly lease fee goes towards the use of the car and the finance charge. When you lease a car you never pay any principal amount.

The big benefit:

The big advantage of leasing over buying is that when the lease term is up all you do is hand the car back to the leasing company. The problem of disposing of the vehicle is theirs, not yours.

It is important that, as a consumer, you know how to compare leasing against traditional financing; in this way you will be in a far better position to determine what approach is best for your situation. A car lease in Lockport makes a great deal of sense to a lot of consumers. To discuss the pros and cons of leasing a new VW you are invited to visit Hawk Volkswagen and don’t forget to like Facebook page for more updates.

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