Graduated Lease

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Definition of 'Graduated Lease'

A graduated lease is a type of lease agreement in which the monthly payments increase over time. This type of lease is often used for vehicles, as it allows the lessee to make smaller payments in the early years of the lease and then larger payments in the later years.

There are several advantages to using a graduated lease. First, it can help to make the monthly payments more affordable in the early years of the lease. This can be especially helpful for people who are just starting out in their careers or who are not yet in a high-paying job. Second, a graduated lease can help to build equity in the vehicle over time. This is because the lessee will be making larger payments in the later years of the lease, which will go towards paying down the principal balance of the loan.

There are also some disadvantages to using a graduated lease. First, the total cost of the lease will be higher than it would be with a traditional lease. This is because the lessee will be paying more interest over the life of the lease. Second, the lessee may have to make a larger down payment in order to qualify for a graduated lease.

Overall, a graduated lease can be a good option for people who want to make smaller monthly payments in the early years of a lease. However, it is important to weigh the pros and cons of this type of lease before making a decision.

Here are some additional details about graduated leases:

* The monthly payments on a graduated lease are typically based on a three-year period. The payments start out low and then increase gradually over time.
* The lessee typically has the option to purchase the vehicle at the end of the lease term. However, the purchase price will be higher than the original purchase price of the vehicle.
* Graduated leases are often used for luxury vehicles, as they allow the lessee to drive a more expensive car than they would be able to afford if they were buying the car outright.

If you are considering a graduated lease, it is important to speak to a financial advisor to make sure that this type of lease is right for you.

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