When you lease a car, you don’t own it. You are essentially renting it, often with the option to purchase it once the lease term expires. However, unlike renting an apartment, maintenance issues, breakdowns and accidents are often your responsibility. Fortunately, you can get coverage (like a factory warranty or extended warranty) in case problems arise, but when your lease expires the auto is expected to be in top-notch shape for its year and model.
Generally, you can expect to have a lower monthly payment than if you owned the same vehicle. When the lease term expires, you may then have the option to buy the vehicle if you like it. But sticker shock might be an issue because you have only been paying for the expected depreciation during your lease term rather than the full price of the vehicle. Your payments are not equity in the auto.
Perhaps the best thing you get with a lease is the ability to walk away and get another car when the lease expires – minus any uncovered issues that may have occurred during your lease, leaving the auto in a substandard state. You would have to remedy the issues or pay to have them fixed. Dealers will want to make sure the auto is ship-shape once your lease ends so they can make money reselling it as used.
People who lease cars often do so regularly, though it typically requires a better credit score than buying. The term can be like any car loan, from three to six years. And you tend to get a little more car for the money; again, because you are paying for the expected depreciation and not the full price of the car during your lease term. Just don’t expect to refinance; it is sometimes possible, but it will almost certainly extend the term of your lease (so that “new car” won’t be so new when the lease ends).
What's the difference in cost between leasing and buying? Check out this calculator.