A Crash Course on Car Leasing

Car leasing is one of the financing options you’re likely to encounter at a car dealership. Leasing a car means paying for its use rather than for the car itself. Many Canada residents choose to lease a car because this option is usually more affordable than new or used car purchase. Leasing a car entails making monthly payments that are lower than the payments for a financed vehicle. The payments for leased cars are lower because the lessee pays only for the cost of the depreciation of the vehicle while the lease is active. Lease terms can either be short-term or long-term; short-term leases can run for as long as two or three years, while long-term leases can last for up to five years. Car leases can also be classified into two types: closed-end leases and open-end leases. If you choose a closed-end lease, you have to specify the number of kilometers you need to use the car for. If you drive the vehicle further than the agreed distance, the dealer requires you to make an additional payment at the end of the lease term. If you keep within the limits, you aren’t required to pay for extra charges. Many car dealers such as Edmonton Jeep dealers also offer their clients open-end leases. For an open-end lease, you and the dealer aren’t required to set a kilometer restriction. Instead, the dealer pre-determines the residual market value of the vehicle. At the end of the lease term, you’re required to make an additional payment to cover for the difference between the vehicle’s value at the end of the lease and the pre-determined residual value. Many people choose to lease cars because of the many advantages leasing can offer. Taxes on leases are usually lower, because the lessee pays tax only on his or her monthly payment rather than for the vehicle’s full price. Leased cars from dealers such as Edmonton Jeep dealers are also usually covered by warranty during the duration of the lease. At the end of the lease term, dealers such as Edmonton Jeep dealers may offer you three options: return the vehicle, purchase the vehicle, or lease a new vehicle. Many people end up wanting to buy the vehicles they lease, especially if the leased vehicle’s residual value is lower than its market value.