Cars Leasing vs. Cars Renting

Although we might use the words “lease” and “rent” interchangeably in everyday conversation, car leasing and car renting are actually incredibly different processes. Car rentals are intended for short-term borrowing only, while car leasing deals typically last for 24 months or longer.

Car Leasing

Some people compare car leasing to apartment leasing, but this can be confusing, since apartment renting and leasing are incredibly similar. It’s better to think of car lease financing as similar to mortgage financing – only instead of money, car leasing companies are loaning you a car.

Just like loan money, you have to “pay back” (or return) your car at the end of the lease. You also have to pay interest on the loan and cover the vehicle’s estimated depreciation in value. This money comes out of your initial deposit and monthly payments.

Car Renting

Whereas car lease deals are calculated based on vehicle value, estimated depreciation, interest rate, and lease duration, car rentals are not determined by any one set of factors. Rental prices vary by company and season by formulas not known to the general public.

Because of the unreliable financing, car rentals are best used by travelers or people in need of specific types of cars for short-term use (i.e., a larger car to accommodate multiple family members). If you’re looking to borrow a car for an extended period of time, cars leasing is really the way to go.