Develop and improve products. List of Partners vendors. When you need a vehicle to get around, you have two basic options: buying one or leasing one. Leasing a vehicle is similar to renting an apartment in that you make monthly payments while enjoying temporary use of the vehicle. A lease may be an attractive option if you're not interested in owning a car right now or you prefer to drive newer vehicles.
Before entering into a leasing agreement, however, it's important to understand how leases work and the restrictions they may impose.
When you buy a car , you take ownership of it. If you're financing the purchase, you'll own the vehicle when you've paid your car loan off in full. If you're paying cash, you'll own the vehicle outright at the time of the purchase. Leasing a vehicle is different. Rather than owning the car, you're paying a dealership for the right to use it for a set period of time, typically two to four years.
You'll make payments monthly, the same way you would if you were repaying a car loan. But at the end of the lease payment period, you don't own anything. A vehicle lease is essentially a contract between you and the car dealership from which you're leasing. When you sign a vehicle lease, you're agreeing to certain conditions set by the dealership. Those conditions can cover things such as:.
Your lease may also specify what your options are when the lease term ends. This may include extending the lease on the same vehicle, exercising a purchase option to buy the vehicle at an agreed-upon price, or signing a new lease on a different vehicle. Leasing a vehicle may be a good option if you'd rather not own one outright. The benefits of leasing include:. Signing a vehicle lease allows for flexibility because you're not locked into the vehicle for the long term. When the lease expires, you can switch to a different vehicle if you'd like or move ahead with purchasing a car, if you're ready.
Assuming that you stick to the lease terms, it can also be cheaper than buying a car, at least for the duration of the lease term. GAP insurance exists to protect the driver of the leased vehicle from paying out of pocket in the event that their leased vehicle is stolen or totalled.
The great news for people who choose to lease from Honda, is that GAP insurance is included as a part of the lease. GAP insurance works alongside collison and comprehensive coverage insurance. Since vehicles depreciate most in the first year or two, there is a chance that if your leased vehicle is totalled, you may still owe more on the car than its true depreciated value at the time of the collision.
GAP insurance will prevent the driver from having to pay out-of-pocket for the difference in what they owe and the depreciated value. Yes, however, the vehicle must be returned to the same dealership you leased it from. If you move out of state, you will need to update the lease company of your move immediately. Vehicles must be returned to the dealership at the end of the lease.
So, what happens if you relocate across state lines prior to the end of your lease term? If your vehicle is leased using the captive finance company, such as Honda Financial Services, it can be returned to any authorized Honda Dealership in the United States! To verify that you are eligible for nationwide returns, contact your leasing company prior to your move and update them with your new address when available.
You need to be licensed and registered in the state where you are a resident. Also, your sales tax rate may be different between states, so your monthly payments may change slightly.
Some states Georgia require taxes on vehicles to be paid upfront, annually. All information, including rates and fees, are accurate as of the date of publication and are updated as provided by our partners. Some of the offers on this page may not be available through our website. Offer pros and cons are determined by our editorial team, based on independent research. The banks, lenders, and credit card companies are not responsible for any content posted on this site and do not endorse or guarantee any reviews.
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Everyday money Buying and running a car. How does car leasing work? Coronavirus and car payments. Learn more about getting out of a car finance arrangement.
Back to top. Money Navigator Tool. Have you got money worries because of coronavirus? How much do I pay a month for a PCH? PCP is similar in many ways, but lets you purchase the car at the end of the agreement.
Find out more about financing a car with Personal Contract Purchase. Restrictions when you lease a car. As with all rental agreements, there are some restrictions you need to bear in mind. However, you can ask the leasing company to make modifications before you take it. Typically this is 10p per extra mile and soon adds up, so make sure you estimate your mileage accurately. Understand the cost of going over the mileage. It might be cheaper to opt for a higher mileage agreement than pay penalties.
So if, for example, a wing mirror gets broken, you might be charged to cover the cost of putting this damage right. If you plan on taking your car abroad, you might need to get written permission from the finance company each time you do so and there might also be a charge. Top tip. Find out more about financing a car with PCP. Your rights if you want to cancel a PCH plan. Return the car. Talk to the finance company.
Find out more about getting out of a car finance agreement early. Compare car leasing deals. Here are some suggestions: Parkers WhatCar? Was this information useful?
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