Leasing question

[GRLMGC]

If you lease a car, do you own it? I know its a stupid question but I've never bought or leased any big purchases.

[politicat]

1. Nope. It's just like leasing an apartment.

You have to give it back when the lease term is up, or pay an acquisition fee that is usually about 50% of what the purchase price was when the car was new.

The upside of leasing is the only thing you have to pay for is gas - oil changes, maintenance, etc are all covered.

If you change cars every couple of years, leasing makes sense because you never get upside down on payments (owing more than the car is worth) but if you are like me and will drive the same car until it has to be buried with a stake through the manifold in a lead box in the Bonneville salt flats to kill it, then leasing doesn't work so well.

[GRLMGC]

2. Cool

Thanks! :)

[Laelth]

3. That's a tricky question.

As it relates to bankruptcy, with most car leases you do have a "security interest" in the vehicle that you're leasing under certain circumstances, particularly when, over the whole of the lease, you pay substantially more than the fair market value of the vehicle at the time you bought it. In theory a lease entitles you to the use and enjoyment of the vehicle, but doesn't grant you an interest in the title to the property. This rule, however, comes from the law of real property (real estate). It doesn't apply very well to a vehicle (though the leasing agent wants it to apply, because they don't want the lessee to have any permanent interest in the car). The bankruptcy courts, however, may find that a lease entitles the lessee to some security interest, i.e. some ownership interest in the vehicle (much like equity in a house).

Hope that helps.

-Laelth