Car leasing is becoming increasing popular, thanks to the flexible payment options and low start-up costs that are involved. Leasing requires the driver to rent the vehicle for a specific period of time; this time scale will be agreed upon prior to the signing of the contract. Some options are for short periods of time, whilst others are indefinite. Leasing is generally seen as a low cost alternative to buying a new vehicle.
Many people confuse leasing with renting; however, the payment methods involved are quite different. When you rent a car, you pay for the vehicle depending on its mileage and hours that it is used; however, when you lease a car you pay in monthly instalments. Monthly instalments on a lease agreement will often take into consideration the insurance costs, interest rates and depreciation value of the vehicle.
Leasing does not require substantial up-front payments; in most cases, to start a contract, the driver has to pay only three months of up-front fees. This is drastically lower than having to pay the deposit on a new car. Monthly payment levels are also much lower, usually between 30% and 60%. The actual amount of the monthly overheads will be calculated before agreeing to a contract and remain fixed throughout the duration of the payment period.
Maintenance costs are also minimal. This is because the person leasing the car does not own the vehicle and is not considered responsible for its upkeep. This means that, in the majority of cases, the repair and maintenance costs are covered in the warranty. Some lease agreements also cover the taxing and insurance of the vehicle; however, the exact terms must be agreed before starting a contract.
When the contract term has been completed the finance company will either take the vehicle back or will sell it for a fixed price. If the driver chooses to continue leasing, a new car will be provided. This enables the lessee to select a new vehicle after a predetermined period of time, typically every two to four years. This can be a massive benefit to many, as they can select a vehicle that has better fuel economy, performance and safety features than their previous car.
When leasing a car, the individual will be able to drive a vehicle that could otherwise be out of their price range, which is one of the main reasons why it is such an attractive option.
For further information and a better understanding of Car Leasing terms, contact Lookers Contract Hire (for personal car leasing), or Lookers Leasing (for company fleet car leasing). Our Leasing experts can provide further guidance on the subject.