 TITLE: What Is a Car Lease and How Does It Work? CONTENT: A car lease is an agreement between a lessor (the company that owns or will buy the car) and the lessee (the person who will pay to borrow the car).\nWhen you lease a vehicle, your monthly payment will be calculated based on the vehicle's depreciation—the change between its current value and its value at the end of the lease—plus interest and fees.\nYour lease agreement covers the following:\n*   How much you have to pay at the start of your lease.\n*   The lease's length—typically a lease lasts for two to four years.\n*   How much the car is currently worth and how much it's expected to be worth at the end of the lease.\n*   The fees you'll have to pay at the end of the lease.\n*   The \"money factor\" or rent charge, which is similar to an interest rate on an auto loan.\n*   Possible termination fees if you want to return the car before the lease ends.\n*   How many miles you're allowed to drive each year. Many leases only allow you to drive 10,000 to 15,000 miles annually; you may be required to pay a per-mile fee if you go over the limit.\n*   How the lessor defines normal wear and tear and how much you'll have to pay if there's excessive wear and tear. If you smoke in the car, have kids, transport pets or park on a busy street, you increase the chances of fee-inducing incidents.\n*   What happens if you miss a lease payment.\nSome of the rules may seem restrictive, but remember, you don't own the vehicle. The lessor keeps the title, and you have to return the car in good condition at the end. END