Automobile Lease Definition

An automobile or auto lease is a method used to obtain the use of an automobile without purchasing it outright. The automobile is actually owned by a financial institution but its use is conveyed to an individual. Most auto leases include a monthly payment amount for a set period of years, often two to four, which generally is higher, though fairly comparable, to an automobile payment. However, at the end of the lease term the physical automobile reverts to the owning financial institution. The lease amount is at least theoretically based upon the amount by which the automobile depreciates over the period of the lease, and for this reason autos which demonstrate the lowest depreciation often make the best candidates for leasing.

The automobile’s user is responsible for most repair and service costs and thus common sense dictates that the lease period should expire before, or with, the manufacturer’s warranty. Auto leases offer individuals with damaged credit a way to obtain the use of an automobile; on the other hand, many drivers prefer to lease as a method of always driving a new or nearly new vehicle.