Both Business and Personal Car leasing have gained a lot of popularity.. One of four cars on the road have been leased and not out rightly purchased.
There are a lot of negative opinions out there about car leasing most of which are false, just like everything else there are advantages and disadvantages. One of the main disadvantages which people seem to always talk about is the monthly payment. Monthly payment should not be seen as a disadvantage as there are a lot of people out there who cannot afford to out rightly pay for their car of choice, car leasing is one of the few finance options that make it possible to afford a vehicle and take it home immediately.
Car hire is another option which is often mixed up with car leasing. With either car hire or car leasing the leaser does not initially own the car, the major difference between them is that car leasing contracts are significantly longer than car hire contracts. Car leasing contracts usually cover a course of twelve, twenty-four, or thirty-six months and obviously the longer the contract the less the monthly payment which makes it less of a burden.
There are basically two types of car leasing: the Closed end leasing and Open end leasing. With closed end leasing, the leaser has the option of changing the vehicle to another at the end of the lease contract where as with open end leasing the leaser is required to buy the vehicle at the end of the contract at a price determined before the lease contract was signed. Closed end leases are widely considered the better option because of the flexibility offered. A few of the benefits of taking up a car leasing contract:
The main benefit of car leasing deals is that you are basically renting the car for the duration you want with an option of owning it or switching another car of choice after the contract expires. It helps individuals avoid the stress and complication that may come with having to sell a car after using it for a while.
Another benefit is that a leaser can lease any type of car they want as they do not require a bank loan to take up a leasing contract compared to out rightly buying a car where there is a possibility that the bank might not be able to loan the amount required as banks have a limit on the amount that can be loaned for car purchases.
Car lease deals come with warranty that will normally cover the entirety of the lease as well as any maintenance costs that may become necessary. Additionally, the lease may even cover the costs of road tax.
With car leasing contracts, you are required to pay a small deposit when signing the contract just like most investments, this is nothing compared to the huge amount required to make an outright purchase, the car can be taken home immediately after signing the contract and a monthly payment is setup. The monthly payment makes it easier for individuals with average incomes to afford a car of their choice.
If you are caught up between deciding if you should buy or lease a car, your financial status and type of car you are considering should be your main deciding factor. Another thing to keep in mind is ‘If it appreciates, buy it. If it depreciates, lease it’.