Automobile Lease

Automobile Lease

A way to structure the purchase of an automobile. Rather than buying a car outright, the buyer rents the vehicle from the seller for a certain period of time, after which the buyer either returns the car or purchases it for a price agreed upon in the lease. Payments are usually lower on a lease than on a car loan, and it is easier to qualify. The buyer also bears no risk for the car's depreciation because he/she can simply return the automobile at the end of the term. The seller, on the other hand, is allowed to effectively sell the car at least twice: once new and once used. However, automobile leases generally are not considered good investments if a person wishes to use a car for a long period of time. It often also comes with more stringent terms, such as a limit on the number of miles one may drive in a year. See also: Capital Lease.