Final answer:
When you lease a car, you are essentially renting the vehicle for a specified period of time. Your monthly payment covers the depreciation of the vehicle, plus interest and fees. At the end of the lease term, you return the car to the leasing company.
Step-by-step explanation:
When you lease a car, you are essentially paying for the privilege of using the vehicle for a specified period of time. Unlike buying a car, where you own the vehicle and make payments towards its purchase, when you lease a car, you are essentially renting the car from the leasing company.
When you lease a car, your monthly payment covers the depreciation of the vehicle during the lease term, plus interest and fees. You are also responsible for any excess mileage or wear and tear charges at the end of the lease term.
Leasing a car can be advantageous because it allows you to drive a newer vehicle with lower monthly payments compared to buying a car. However, it's important to understand that at the end of the lease term, you do not own the vehicle and will need to return it to the leasing company.