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What does it mean to lease a car?

Leasing a car means agreeing to make a monthly payment and drive the car for a defined number of months and miles. You don’t own the car as you would with an auto loan, but you must maintain full-coverage auto insurance on it.

How does a car lease work?

You’ll typically make monthly lease payments on a vehicle, and in exchange the dealer allows you to drive it. At the end of the lease, you’ll either return the vehicle to the dealership or buy out your lease if you want to keep the car, if that’s an option in your lease. You’ll typically need good credit to lease a new car.

What happens when you lease a car?

When you lease a car, you pay monthly to drive a vehicle. At the end of the lease agreement, you return the vehicle to the dealership. Unlike when you buy a car, you don't own a leased vehicle. Essentially, car leasing is renting a car for a short or long period.

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