Car
leasing, involves using a motor vehicle for a fixed period usually in
years at an agreed amount of money for the length of the lease. The
period is normally much shorter (24-36 months) than a car loan , though terms of 48-60 months are also available. After the expiry of the lease you return the
car to the dealer for disposal. So literally, you can drive a new car
every few years!
Lease payments are usually much lower and the qualification process is easier than obtaining a car loan. The car lease agreement though comes with certain conditions; maximum allowable mileage per year(usually 10,000 miles), allowable wear and tear, early lease termination fee, etc. Beware penalty fees may apply if you violate the lease agreement. Work out what is best for you basing on the projected use and if possible negotiate for a higher mileage for a slightly higher lease payment if necessary to avoid penalties. You can also opt in for a lease with maintenance; excluding fuel and insurance to save yourself the headache of breakdowns and regular maintenance. Newer vehicles, require less maintenance. So it is not worthwhile paying extra unless you make frequent long trips. This option is good for businesses and large companies.
Lease payments are usually much lower and the qualification process is easier than obtaining a car loan. The car lease agreement though comes with certain conditions; maximum allowable mileage per year(usually 10,000 miles), allowable wear and tear, early lease termination fee, etc. Beware penalty fees may apply if you violate the lease agreement. Work out what is best for you basing on the projected use and if possible negotiate for a higher mileage for a slightly higher lease payment if necessary to avoid penalties. You can also opt in for a lease with maintenance; excluding fuel and insurance to save yourself the headache of breakdowns and regular maintenance. Newer vehicles, require less maintenance. So it is not worthwhile paying extra unless you make frequent long trips. This option is good for businesses and large companies.
Car leasing still offers a sizeable fraction of revenue for car
manufactures around the globe. It is common amongst
business companies, which prefer to lease other than an outright purchases of cars, in addition to the luxury cars market where the buying
price of a car is prohibitively expensive for everyone to afford. Car leasing may not be good for everyone as revealed shortly, and it may not exactly be cheaper than an outright purchase depending on the vehicle leased. It is best to keep the lease term short, say 24-36 months in order to keep the cost down. Always do a survey on the car prices and lease prices before committing to any one deal. In some instances, it can be cheaper to buy than leasing.
Qualification for a car lease is based on credit rating. A good credit history will earn you a good lease deal while a poor credit rating might prove prohibitive to getting a car lease approval. Most manufacturers nowadays have in-house financing companies, which offer leases to mainly top-tier customers or customers with a proven credit history. If you have a poor credit rating, chargeable lease and down payments are normally bigger to mitigate the financial risk to the company.
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