Leasing Myths That Don’t Hold Up

A few ideas about leasing get repeated so often that people assume they’re true. Most of them aren’t.

In the fourth episode of Inside the Lease, the D&M team works through the most common myths about leasing, starting with the biggest one. Leasing is not renting.

The confusion makes sense on the surface. Both involve a monthly payment and handing the car back at some point. But the mechanics are completely different.

When someone leases a car, they’re paying for the portion of the car they use. A car depreciates the same amount whether someone buys it, finances it, or leases it. On a $50,000 car that will be worth $25,000 in three years, a lease payment covers that $25,000 difference, the depreciation. A traditional loan over the same term requires paying the full $50,000, and then the owner has to sell or trade the car to recover whatever it’s worth at that point.

The number that makes a lease work is the residual value, a guaranteed future value built into the contract from day one. If the car ends up worth less than the residual, that difference is absorbed by the leasing company, not the customer. If it’s worth more, the customer keeps that equity and can apply it to the next vehicle. Either way, the customer isn’t exposed to the downside the way they would be with a loan.

That guarantee is also what answers the renting question directly. With a rental, there’s no equity, no ownership path, and no upside. With a lease, a customer can return the car, buy it outright, or roll the equity into a new lease. Some customers go in planning to keep the car short term and end up buying it. Others plan to buy and decide to trade instead once their needs change. The lease gives them the flexibility to make that call later instead of locking it in upfront.

Mileage and wear and tear are two more areas where myths tend to cluster. Both matter, but not because of leasing. A car that’s been driven hard or put on extra miles is worth less at trade-in, whether that car was leased or financed. The difference is that a lease accounts for mileage upfront, so the payment reflects how the car will actually be used. D&M also builds in 5,000 miles of mileage forgiveness, so customers aren’t stressing over every mile near the end of a term.

The team also addressed a more particular myth, the idea that only certain makes or models can be leased. That’s not true either. D&M can lease any make, any model, new or pre-owned, as long as a used vehicle falls within reasonable mileage parameters.
The common thread through all of it is the same one that’s come up in every episode so far. A lease isn’t a different category of ownership with its own rules. It’s a different way of structuring the same car to match how someone actually plans to use it.

Inside the Lease is a podcast from the leadership team at D&M Leasing, the nation’s largest direct-to-consumer auto leasing company.