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| Depreciation | ||
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The term, depreciation, regarding a car lease, refers to the steady reduction in a vehicle's value as the vehicle gets older and as more miles are driven. Depreciation is greatest in the first year of a vehicle's life. In leasing, you only pay for depreciation, not for the entire value of a vehicle, as you do when you purchase. This is the reason that monthly payments are lower for a lease than for a comparible loan, for the same vehicle. Depreciation varies for different vehicle makes and models. Some makes such as Mercedes and Honda have very low depreciation. Other makes, such as Chevrolet, have much higher depreciation. When leasing, vehicles with lower depreciation have lower monthly payments than vehicles with higher depreciation, even though prices and interest rates are the same. For more information, see: The Lease Guide
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