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How is leasing different from buying? Is leasing different from buying? What are the upfront, and end-of-lease costs? How do you compare lease offers and negotiate lease terms? What is a residual? The answer to these questions and more can be found by reading on.

Under the Consumer Leasing Act, as implemented by Federal Reserve Regulation M, a vehicle lessor must provide you, the consumer, with certain information. Some of the information (called "segregated disclosures") must appear on the lease form. Other information that you must be given (the "nonsegregated disclosures") will not necessarily appear on a form or in one place in your lease.

Under the Federal Consumer Leasing Act, you have a right to information about the costs and terms of a vehicle lease. This information will help you compare lease offers and negotiate a lease that best fits your needs and budget.

This consumer guide is for a closed-end lease, the most common type of vehicle lease. With a closed-end lease, you may return the vehicle at the end of the lease term, pay any end-of-lease costs, and walk away (also termed a "walk away lease"). "Leasing language" gives definitions of terms associated with vehicle leasing.

Leasing is very different from buying.

IF YOU LEASE . . .	IF YOU BUY . . .
OWNERSHIP You do not own the vehicle. You get to use it but must return it at the end of the lease unless you choose to buy it.	OWNERSHIP You own the vehicle and get to keep it at the end of the financing term.
UP FRONT COSTS Up-front costs include the first month's payment, a refundable security deposit, a capitalized cost reduction (like a down payment), taxes, registration and other fees depending upon where you live.	UP FRONT COSTS Up-front costs include the cash price or a down payment, taxes, registration and other fees depending upon where you live.
MONTHLY PAYMENTS Monthly lease payments are usually lower than monthly loan payments because you are paying only for the vehicle's depreciation during the lease term, plus rent charges (like interest), taxes, and fees.	MONTHLY PAYMENTS Monthly loan payments are usually higher than monthly lease payments because you are paying for the entire purchase price of the vehicle, plus interest and other finance charges, taxes, and fees.
EARLY TERMINATION You are responsible for any early termination charges if you end the lease prematurely.	EARLY TERMINATION You are responsible for any pay-off amount if you end the loan prematurely.
VEHICLE RETURN You may return the vehicle at lease end, pay any end-of-lease costs, and "walk away."	VEHICLE RETURN You may have to sell or trade the vehicle when you decide you want a different vehicle.
FUTURE VALUE The lessor has the risk of the future market value of the vehicle.	FUTURE VALUE You have the risk of the vehicle's market value when you trade or sell it.
MILEAGE Most leases limit the number of miles you may drive (often 12,000-15,000 per year). You can negotiate a higher mileage limit and pay a higher monthly payment. In almost every case, you will have to pay additional charges for exceeding those limits if you return the vehicle.	MILEAGE You may drive as many miles as you want, but higher mileage will lower the vehicle's trade-in or resale value.
EXCESSIVE WEAR Most leases limit wear to the vehicle during the lease term. You will have to pay extra charges for exceeding those limits if you return the vehicle.	EXCESSIVE WEAR There are no limits or charges for excessive wear to the vehicle, but excessive wear will lower the vehicle's trade-in or resale value.
END OF TERM At the end of the lease (most are 2-4 years), you may have a new payment either to finance the purchase of the existing vehicle or to lease another vehicle.	END OF TERM At the end of the loan term (most are 4-6 years some lasting as long as 8 years), you have no further loan payments. However, recent studies have confirmed that 74% of car buyers trade or otherwise sell the vehicle before paying off the loan.