Leasing is just an alternative form of financing a vehicle. Instead of paying your loan to zero the residual value is set for the vehicle. This residual value usually reflects the future value based on a specific mileage. For example a lease will allow 24,000 km per year and the residual value will be set for this mileage. You then have the option at the end of the lease to buyout your lease, return it if it is under mileage or extend your lease till you buy it or trade it for a newer model.