Every Fleet Vehicle When You Can Simply Lease Them

Dec 8, 15 • PROAdviceNo CommentsRead More »

Many firms are more and more attracted to the idea of car leasing, but are confused by the various kinds of automobile lease available. The following is a basic guide to how each sort of automobile lease arrangement works.

The most popular type of car or van leasing agreement is contract hire. With contract hire a month-to-month payment is made throughout the automobile lease period and the automobile is then returned at the end of the term. The main benefits are comparatively low fixed month-to-month payments (the payments being based on the automobile’s total depreciation in the course of the time period, rather than on the car’s complete value), and the instant offloading of the automobile at the end of the period without any additional settlement costs or worries about future depreciation and potential maintenance costs. One potential downside of contract hire is that if the automobile exceeds a pre-agreed total mileage then monetary penalties may very well be incurred.

Contract purchase is similar to contract hire, but with the added option of being able to purchase the car at the end of the term. Should you look after your car well and become psychologically attached to it, this can be a very good option.

With lease purchase however, the enterprise actually agrees on the outset to buy the car. Therefore a lease purchase agreement is less versatile – you’re committed to purchasing the car, regardless of your future circumstances.

For those with growing families, there could also be pressure to upgrade the family car. Rather than worrying about the best way to finance the purchase of a brand new automobile, however, it might be worth contemplating car leasing.

With automobile leasing, the client doesn’t have to buy a car at the outset or fund an expensive finance agreement. All that’s usually required is a relatively modest deposit followed by equally modest month-to-month payments. The payments remain consistent all through the contract term, serving to to facilitate simpler budgeting. Depending on the nature of the automobile leasing agreement, the automobile may be purchased on the finish of the lease interval or just returned to the automobile leasing company with the option to take out a lease on another, possibly larger car.

Crucially, the rationale behind the comparatively modest monthly payments for car leasing is that they are based on the vehicle’s anticipated depreciation rather than its precise value. Ironically, this means that higher high quality vehicles, which may have a lower rate of depreciation, might thus require comparatively lower month-to-month automobile lease payments.

For the growing household, this capability to have access to a brand new high quality automobile means there will likely be much less chance of a mechanical breakdown, elevated comfort and convenience, and use of the producer’s latest standard in-car facilities. Importantly, there will also be protection from the safety features often related to a top quality vehicle.