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What would be the advantages of leasing over conventional credit of a new car?

I went to a car dealer and was explained both plans (leasing and conventional) The leasing plan offered a lower monthly payment. It looks like I can turn the can in at any time, so I don't have to go on with the payment and get me a new car. I want to know if there are other advantages, or disadvantages over a conventional plan.

Public Comments

1. In a typical auto lease, ownership of the car is held by the leasing company and not you. However, you usually have a buyout option towards the end of the lease for a fixed residual purchase price. This ownership point means that the leasing company bears the market value risk of the vehicle. That is, if the car's value depreciates faster than expected, you won't get stuck with a low-value vehicle and you don't have to buy it at the end of the lease. However, you may need special auto insurance that covers the difference between the market value and the lease's residual value of the vehicle in the event that the car is totaled. The leasing company also stipulates how many miles you can drive the car over the term of the lease. If you go over the allotted miles, you will be required to make an additional payment unless you buyout the vehicle. You will also need to insure that the vehicle is returned in good condition if you do not plan to buy the car at the end of the lease. From a cash flow perspective, a lease doesn't usually require an large up-front downpayment like an auto loan. In addition, leases can be for shorter periods than loans so they are typically favored by folks who like to get new vehicles every 2-3 years. Finally, the state sales tax on leased vehicles may differ than that of a purchased vehicle. Some states may charge you an up-front sales tax on the entire purchase value of the car similar to buying the car. Some states may just tax your lease payments.