A Short Look Into The Pros And Cons Of Vehicle Leasing And How The Car Leasing Model Works |
|---|
|
Dirik Hameed (SubmitYOURArticle.com)
May 20, 2011
http://www.inx-gaming.com
Vehicle leasing or car leasing is a very attractive way of gaining access to a car or vehicle. It allows you to finance a depreciating asset with no commitment to purchase it at the end of the lease contract.
A vehicle or car lease means you are paying to use the car/vehicle, not paying to own it. The lease period is usually between two and five years and when this period is up you either have to renew the lease, return the vehicle or purchase the vehicle according to its residual value (the vehicle's value after depreciation). Newer cars are often available at the end of a car lease. As such most people return the car rather than buy it or renew the existing lease.
Car lease payments are made every month. The monthly payment amount is determined through calculating how much the car value will depreciate during the lease period. This amount equals the value of the use of the car. A finance charge (which is generally interest) is calculated and there may be other fees depending on the lease contract, most of which are due upfront. Monthly charges are calculated after an initial down payment has been made. This down payment may include a finance charge, the depreciated value of the car and any additional charges. The advantage to having a leased vehicle is that you are able to lease a more expensive vehicle that you would be able to purchase. This is because you are only paying the part of the cars value that you use.
Leasing has its pros and cons but a significant benefit when leasing is that you generally do not need to worry about maintenance. This is because car leasing companies generally lease new cars. You should do preventive maintenance as required by the car manufacturer, and keep records of this maintenance. Many leasing companies will also offer optional maintenance packages. There is the flexibility of being able to choose a new vehicle after the lease expires. This means that if you took out 2-year car lease contracts for example, you could have 5 new vehicles over 10 years. A down side to leasing is that in the long term it can cost more than buying a new car.
You can't modify the car because you don't own it, and you may require more comprehensive vehicle insurance which is more expensive. With most car leases being relatively short (two or three years), you will be required to deal with lease contracts and companies relatively frequently, during which the terms of one lease may vary greatly from those of another. Both your credit score and the value of the car you choose to lease may cause monthly payments to fluctuate from one lease to another. Car leases can also impose certain restrictions, such as a limit to the number of miles you are allowed to drive in the leased vehicle. If you go over this limit, you will incur an extra charge after the lease expires. If you need more mileage than is being offered, you can purchase it before the lease starts.
----------------------------------------------------
For car lease contact Leasing Options at http://www.leasingoptions.co.uk . Leasing Options offer a range of vehicle leasing choices at http://www.leasingoptions.co.uk/vehicle-leasing .