Car Leasing Basics


If you need a car to drive but don’t have the budget to make a large down payment, then you may consider getting a car lease. To put it in a nutshell, car leasing means “renting” a vehicle from a leasing company. Instead of making one large payment to buy a car, leasing gives you the option to pay small monthly installments as you get to drive the leased car. Car leasing basics from Reedman Toll Chrysler Dodge Jeep Ram of Springfield.

What are the types of car leasing?

You can make a choice between a closed-end land an open-end lease – take a look:


This option enables you to return the car at the end of the lease term and simply walk away. Nevertheless, you should be able to comply with the terms of use of the leasing company to avoid paying penalty charges.

For instance, if you exceed the maximum number of mileage, you are subjected to pay fees for each exceeding mile. In addition, the car will be evaluated upon return and if the wear and tear is beyond the acceptable level defined in your contract, you will need to pay the charges. You can also choose to buy out the car at the residual value. The buyout price should be clearly stipulated in your contract when you signed up for the lease.


This particular type of lease is especially offered for businesses. In an open-end lease, the lessee pays the difference between the pre-determined residual value and the market value of the car which is determined at the end of the lease.

Why opt for car leasing?

First, leasing a car involves a minimal upfront cost. Most leasing companies only require the first-month lease payment and a security deposit. On the contrary, purchasing a car requires a huge sum of money since you will need to pay the price of the car at once, including the down payment to your car loan lender.

Monthly lease payments are also much lower compared to the monthly car loan payments. Since you are merely “renting” the car from the leasing company, you are not paying the full price of the car as you would if you will purchase.

However, you must be able to comply with the terms of use of your lessor or else you could rack up hefty penalties. Most leasing companies impose a limit on the number of mileage you can drive in a year. If you go beyond the maximum mileage, you must pay a cost for each exceeding mile. Before opting for a lease, read up on the basics so you don’t regret your decision later.

Are you or anyone in your family looking for a new, or used car head on over to Reedman Toll Chrysler Dodge Jeep Ram of Springfield. Not only do they have a great selection of vehicles they will make sure they help you in every way they can.

Leave a Reply