When a car is leased, a leasing company gives the client the right to use the vehicle. The client (lessee) pays monthly instalments for this just as with a hiring contract. All details are settled in a leasing agreement. At the end of the duration, the client either returns the vehicle or keeps it against payment of the remaining purchase price.
Pros of a lease:
- Less cash required
- Fixed monthly costs are known
- No selling risk
- Fixed monthly costs are due even if the car is not used for a longer period of time
- Full casco insurance (comprehensive and collision) is mandatory, which could put a great strain on your budget
If you lease a car, you have to take out full casco insurance including replacement value supplement.