Leasing is another type of finance that may suit people who regularly trade-in their car. In a lease arrangement, the ownership of the car stays with the lessor or lender and the car is returned at the end of the lease term. You can terminate the lease early by returning the car but there is a cost involved and this should be explained in the contract.

Conditions apply

Be careful, some leases have conditions that base the residual value of the car on the distance that the car will travel and on its condition. If for some reason the car is not worth the estimated residual value at the end of the lease then you may have to make up the price difference. If you intend to buy a car on a lease agreement, make sure that you are aware of any conditions on the car such as mileage and its condition at the end of the lease period.