question: What is the difference between buying a car and leasing a car?
comment: When you lease a car, you are basically entering a long rental agreement with the dealership. You have to make a down payment and then make monthly payments. You are also limited to a certain number of miles per year with the vehicle, and you have to stick to the maintenance schedule (though sometimes the dealership takes care of the maintenance because it's still one of their assets). When the lease agreement ends, you can either return the car, or you can pay the remaining balance of the car. When you buy a car, you can either buy the car entirely with one payment upfront, or you can "finance it" (take a loan out from a bank). You are responsible for maintaining the car, but you are also allowed to do whatever you want with it (as long as that is legal in your state) and you can also sell the car to someone else or trade it in as part of a down payment for another vehicle.
passages: Vehicle leasing is the leasing (or the use) of a motor vehicle for a fixed period of time at an agreed amount of money for the lease. It is commonly offered by dealers as an alternative to vehicle purchase but is widely used by businesses as a method of acquiring (or having the use of) vehicles for business, without the usually needed cash outlay. The key difference in a lease is that after the primary term (usually 2, 3 or 4 years) the vehicle has to either be returned to the leasing company or purchased for the residual value.
  
  Section::::Rationale.
   Similarly to the US automotive market, leasing a vehicle enables you to have access to a vehicle that you might otherwise be unable to afford if you were to finance the full value. Compared to a PCP method of finance, leasing is far more benefical if you plan on changing your vehicle at the end of the initial contract, rather than taking ownership.
  
  Section::::UK Vehicle Leasing.:Market Overview.
   Lease agreements typically stipulate an early termination fee and limit the number of miles a lessee can drive (for passenger cars, a common number is 10,000 miles per annum though the amount can be stipulated by the customer and can be 12,000 to 15,000 miles per year). If the mileage allowance is exceeded, fees may apply. Dealers will typically allow a lessee to negotiate a higher mileage allowance, for a higher lease payment. Lease agreements usually specify how much wear on the vehicle is allowable, and the lessee may face a fee if that amount of wear has been exceeded. A lease with maintenance (commonly known in the UK as Contract Hire) can include all vehicle running costs excluding fuel and insurance.
   A sublease can also apply to vehicles as an alternate type of car rental. In a vehicle sublease, a lessee or vehicle owner can assign a lease to a third party and by way of contractual agreement for specific dates. Although this arrangement is not popular, it is a growing trend in the travel industry as a less expensive alternative for travelers and locals.
  
  Section::::Equipment leasing.
   A sharing arrangement with much of a landlord's property or, for no specific room of a building for instance, may defeat a finding of a lease, however this common requirement of a lease is interpreted differently in many jurisdictions.
  
  Section::::Provisions specific to car rental.
   Leasing's average retail market penetration rate in the United States for new passenger vehicles reached an all-time record high of 26.5% in February 2014. This represents a recovery from a severe drop during the financial crisis of 2007–08. As of 2016, leasing accounted for about 25 percent of total vehicle sales or 31 percent retail sales in the United States.
  
  The prevalence of leasing in the United States for GM, Ford and Chrysler have been rising close to the industry norm since reaching low single digits in 2009, but still lower than BMW and Mercedes-Benz.
  
  Section::::Lease agreement.
   However the counter to this is if the employee wants or needs to sell the vehicle during the term of the lease, breaking the lease contract can be very expensive, sometimes far in excess of the current market value of the vehicle.
  
  For the employer:
  
  BULLET::::- A way to provide an effective increase in employees' salaries with no or minimal cost to the business
  
  BULLET::::- A cost effective alternative to operating a fleet of company vehicles
  
  BULLET::::- Compared to company cars, the business does not assume any risk for the vehicles
   Car financing options in the United Kingdom similarly include car loans, hire purchase, personal contract hires (car leasing) and Personal Contract Purchases.
  
  In 2016, Toyota was found guilty of racist lending practices.
  
  Section::::Car leases.
   Cars are treated in a concessional manner by the fringe benefits legislation and rather than using the actual running costs, the value of the fringe benefit can be set at 20% of the original purchase price of the vehicle, less stamp duty, motor vehicle registration and Compulsory Third Party Insurance. This concessional treatment assumes some business use of the provided motor vehicle, but business use is not actually required. Other vehicles such as commercial vehicles, utilities and motorbikes are not subject to this treatment, but may be exempt from FBT under certain circumstances.
   BULLET::::- Compared to company cars, employee vehicles are "off balance sheet"
  
  BULLET::::- Compared to company cars, the employer is not stuck with the vehicle if the employee leaves.
  
  For the service providers:
  
  BULLET::::- They provide various services for fees and/or commission.
  
  Section::::Novated leases in the United Kingdom.
  
  In the UK, a novated lease refers to a car lease which has been novated (transferred) to a third party with the consent of the lessor, the original lessee and the prospective lessee. The transfer of liability for the lease, between two legal entities, is normally covered by tripartite contract.
   In the U.S., the sale of these supplemental insurance/waiver products may be regulated by each state's insurance department, and a special limited license may be required by the rental company in order to sell them. The specific coverage offered can differ substantially, depending on the state or country in which the car is rented.
  
  Section::::See also.
  
  BULLET::::- Consolidated rental car facility
  
  BULLET::::- Carsharing
  
  BULLET::::- Damage waiver
  
  BULLET::::- Peer-to-peer carsharing
  
  Section::::Bibliography.
  
  BULLET::::- Harris Saunders, "Top up or down?: The origin and development of the automobile and truck renting and leasing industry--since 1916", 1985
   BULLET::::- Access to volume discounts if the employer/salary packaging company has many vehicles under this scheme:
   A lease is a contractual agreement between a lessor (the person who owns the property) and a lessee (the person who gets to use it during the term of the lease). Usually, car leases allow the lessee to drive the car for a certain number of miles (under 12,000 per year is standard) for a certain number of years (say, three years). The lessee pays a fixed monthly payment for the privilege of driving the vehicle, and when the lease ends, the lessee returns the vehicle to the lessor. Lease rates are not just based on what the car is worth today because the lessee does not buy the whole car. Instead, the lessee pays only for the value of the vehicle for the term of the lease. Lenders calculate lease payments based on the vehicle’s residual value, or what they estimate the car will be worth when the lease is over.
   BULLET::::- Hire purchase, used in the UK and other countries for the purchase of cars, other consumer equipment and business equipment. The term lease-purchase is also used.
  
  BULLET::::- Closed-end leasing, used in the US and Canada for the leasing of cars. Unlike in hire purchase, the asset is sold at its residual value at the end of the term, rather than for a nominal amount.
   In the UK the leasing market has historically been dominated by businesses and fleet customers. In recent years however the market has shifted and now personal contracts have the biggest market share. This is largely influenced by increasing company car tax for drivers (BIK) and taxable allowances for businesses being affected by vehicle emissions. For company car users who opt out, a personal lease contract allows them to have a fixed monthly payment that's subsidised by their employer, but also allows for a more flexible choice of vehicles than a rigid company car policy.
  
  Section::::See also.
  
  BULLET::::- Car rental
   The first term is "fully maintained novated lease", describing the most common type of salary packaging arrangement, where a finance lease is novated so the employer pays the lease rentals but also pays all other running costs (excluding the effect of employee contributions). This terminology is confusing as outside of salary packaging, a "fully maintained lease", describes an operating lease where the lease contract includes in the rental payments the fixed running costs of a vehicle or asset, such as insurance, registration, servicing and roadside assistance as well as some variable costs like fuel and tyres. The lessor simply hands back the vehicle at the end of the lease with the lessor assuming the residual value risk. There are usually terms in the contract with penalties or fees to protect the lessor from excessive costs and depreciation of the asset. Thus, a "fully maintained novated lease" is not a novation of a "fully maintained lease".
   A lease should be contrasted with a license, which may entitle a person (called a licensee) to use property, but which is subject to termination at the will of the owner of the property (called the licensor). An example of a licensor/licensee relationship is a parking lot owner and a person who parks a vehicle in the parking lot. A license may be seen in the form of a ticket to a baseball game or a verbal permission to sleep a few days on a sofa. The difference is that if there is a term (end time), a degree of privacy suggestive of exclusive possession of a clearly defined part, practised ongoing, recurrent payments, a lack of right to terminate save for misconduct or nonpayment, these factors tend toward a lease; by contrast, a one-time entrance onto someone else's property is probably a license. The seminal difference between a lease and a license is that a lease generally provides for regular periodic payments during its term and a specific ending date. If a contract has no ending date then it may be in the form of a "perpetual license" and still not be a lease.
   Novated lease
  
  The term novated lease is used to refer to a motor vehicle lease which has been novated, that is, the obligations in the contract have been transferred from one party to another.
  
  The term is often used in Australia to describe the entire arrangement for the use of a motor vehicle via salary packaging, where, as part of the arrangement, a lease is novated from an employee to an employer.
  
  Section::::Novated leases in Australia.
   Closed-end leases generally provide that the lessee is responsible for insuring the property, for maintaining it in accordance with the lessor's requirements, and for paying any taxes or license fees which may be assessed on the lessor as owner of record. Motor vehicle leases generally include a provision for determining the amount of "excess wear and tear" (or "wear and use") at the end of the lease term, for which the lessee is responsible upon returning the vehicle.
   Car ownership
  
  Car ownership is the ownership of a car.
  
  Section::::History.
   BULLET::::- A business buys a vehicle and obtains financing. The company purchasing the vehicle becomes the registered owner and has both possession and "right of possession". The financial organization providing financing would become the lienholder and have a security interest that, upon default, would ripen into a "right of retention" ("ius retentionis"). If the business that bought the vehicle then rented it to someone, that individual would then have "possession" but would not have "right of possession". The company renting the vehicle to them could repossess the vehicle, for example, if they hold the vehicle past the contract period. Also, if the rental company missed payments to the lienholder, the lienholder could repossess the vehicle from the person having possession as well.
   Closed-end leases have become very popular for automobile buyers in North America since the mid-1980s. Shield laws in most states allow lessors to avoid legal responsibility for the actions of their lessees, which has made it practical for automakers to offer leases direct to consumers without fear of "deep pockets" liability for injuries resulting from an accident. In those states which assess a use tax on vehicles, lessees need only pay tax on the amount of their lease payment, not on the entire value of their vehicle at the time of purchase. Finally, and most significantly, because lessees pay only for depreciation and financing, and not the entire retail cost of the vehicle, payments can be significantly lower than in loan-based financing. This allows consumers to significantly shorten their purchase cycle, increasing new-vehicle sales, which gives the automakers reason to emphasize leasing programs in their marketing.
   In addition to the above, a car rental agreement may include various restrictions on the way a renter can use a car, and the condition in which it must be returned. For example, some rentals cannot be driven off-road, or out of the country, or towing a trailer, without specific permission. In New Zealand you may have to specifically endorse a promise that the car will not be driven onto Ninety-Mile Beach (because of the hazardous tides).
   The actual lease payments are calculated in a very similar way to loan payments, but instead of an APR, the company uses something called the money factor.
  
  At the end of a lease's term, the lessee must either return the vehicle to or buy it from the owner. The end of lease price is usually agreed upon when the lease is signed.
   Additional classifications based on seat numbers and trunk volume were also set by the Belgian Rent a Car association in order to provide a unified system for assessing the car types in online reservation systems and airline global distribution systems.
  
  Section::::Rental conditions.
  
  Car rentals are subject to many conditions which vary from one country to another and from one company to another. Generally the vehicle must be returned in the same condition it was rented in, and often must not exceed mileage restrictions, otherwise, extra fees may be incurred.
  