Should I lease or buy a car? In order to make the best decision possible it is first necessary to understand what a lease is. This is perhaps simplest to accomplish by associating a car lease with a lease on a home you are renting. A lease is a temporary agreement between a lessee (you) and a lessor (a landlord, property owner or a car leasing company). You pay a specific amount of money to the lessor each month for a predetermined amount of time. Down payments are generally required unless special circumstances apply.

A down payment for a home rental is referred to as a security deposit. A down payment pursuant to a car lease is simply known as the down payment. Whereas a home rental security deposit is refundable provided no damages are done to the home during your rental tenure, a car lease down payment is used partially as security and partially as a means to reduce your monthly payment amounts. Therefore it is crucial to comprehend all your lease terms with absolute certainty prior to signing it.

A down payment for a home rental is referred to as a security deposit. A down payment pursuant to a car lease is simply known as the down payment.

Whereas a home rental security deposit is refundable provided no damages are done to the home during your rental tenure, a car lease down payment is used partially as security and partially as a means to reduce your monthly payment amounts.

Therefore it is crucial to comprehend all your lease terms with absolute certainty prior to signing it.

While car lease benefits are numerous, it is also important to understand the most common risks. When you lease a car, you are only responsible for routine maintenance charges under specific circumstances. 

If the car breaks down or damages are caused due to faulty workmanship or materials, you are most likely not responsible for the related expenses. 

In the instance that you are the at-fault driver who causes damages, however, you might owe for the balance on the lease plus the all-repair expenses. The same is true for driving the vehicle over the allotted amount of miles as specified in your lease agreement.

Auto loan vs. lease agreement terms each have pros and cons. Should I lease or buy a car? The answer has a lot to do with which aspects of buying and leasing a car are most important for you, your lifestyle and your budget.