A lease is a contract outlining the terms under which one party agrees to rent an asset—in this case, property—owned by another party. It guarantees the lessee, also known as the tenant, use of the property and guarantees the lessor (the property owner or landlord) regular payments for a specified period in exchange.

A lease is an implied or written agreement specifying the conditions under which a lessor accepts to let out a property to be used by a lessee. The agreement promises the lessee use of the property for an agreed length of time while the owner is assured consistent payment over the agreed period.

Leasing a vehicle is essentially entering into a long term rental agreement for that vehicle. Unlike a traditional car purchase, you don’t actually own the vehicle. Instead, a leasing company purchases the vehicle from the dealer on your behalf and then you make monthly payments to the leasing company for the duration of your lease.

Leasing a car means that you basically rent it for a specific and limited time period. Buying a car means that you own it outright and build equity in the vehicle with monthly payments (if you finance the purchase). Benefits of leasing usually include a lower up-front cost, lower monthly payments compared to buying, and no resale hassle.

With a lease, buyers make a monthly payment to drive a new car for a set term. That payment is often less than the monthly cost of financing a new vehicle, but buyers must return the car at the end of the lease term.