Vehicle leasing is the use of a motor vehicle for some time for an agreed amount of money. Leasing can have you hold the car for years with the option to buy or return to the car lease companies after the time of use. In this case, a car lease is different from car rental services.
What Is The Process Involved In Obtaining A Car Lease?
You do not need to get a loan or pay a large sum of money with a vehicle lease. You get to drive a new car around without leaving your account in the red. To make a lease, you make a down payment of, most times, less than 20% of the original value of the car followed by monthly payments for the duration of the lease. When the period of the lease expires, you will have to return the vehicle. First, you will select the car that you want, then pay a processing fee so that the broker can get the deal running.
Before this, you will get approval for the term of the lease and your mileage limit. After these crucial steps, you will then wait for car delivery.
Types Of Car Lease
1. Closed-end lease
This deal allows you to walk away from the lease without any other responsibility other than paying for any damages that is incident on the car. It is based on the supposition that the residual value of the vehicle can be predicted since there is the assumption that the vehicle would not be ridden in rough and undesirable conditions. At the time of the lease, the company estimates the residual value based on the number of driven miles. If the vehicle is worth less after you turn it in, the company takes the financial responsibility.
2. Open-end lease
Here, the customer is responsible for all financial risks rather than the leasing company. It is used mainly for commercial business leasing. If there is a difference between the estimated residual value and the actual worth after the car’s return, you as the customer will shoulder the financial burden. The residual value is usually set much lower than the closed-end lease, which reduces the risk for customers, but it increases the amount paid monthly.
The Benefits of Vehicle Leasing
- For a brand new car, it has the lowest upfront payment and monthly expenses.
- You get cover from the manufacturer’s warranty throughout the term of use; it also covers road tax, breakdown cover, and servicing cost.
- The future value of the car does not concern you.
The Demerits in Vehicle Leasing
- You do not own the vehicle, and you do not get your monthly payments back after the vehicle is sold.
- You have a mileage limit. You will pay extra charges if you drive over it.
- You are liable for damages to the vehicle, and also the prices don’t often include VAT.
There are online leasing companies, like Hiyacar, from which you can place a lease order. Make sure to read reviews before making a deal with any of them. You can read Hiyacar Reviews here.