Leasing is a financial arrangement between an individual or a company and an owner of a property, which allows the individual or company to use the property for a specified period. A lease contract grants the lessee the rights to use the property while remitting an agreed amount of money to the lessor regularly.
Since vehicles are an important part of the modern daily life and business operations, there are two main ways that you can acquire one for your needs; leasing or buying. Buying a car is a straightforward process where you can make either a cash payment or make a credit arrangement for the car. When you use a loan, you make monthly payments and gain equity in the car until it eventually becomes yours. If you make a cash payment for a car, you can save money and have full control of the car.
Both buying and leasing have a good side and the bad side. However, many people are increasingly opting for the lease option because of its many benefits as opposed to buying. With a lease, for instance, you get to drive a new car after every few years and do not have to think about how to dispose of it after it ages.
Benefits of car leasing
Car leasing is popular as it allows people to have access to the kind of vehicles that suit their needs without necessarily covering the vehicles’ full cost. This trend is becoming a global norm because many people have become aware of its benefits. Knowing about the car financing option has significantly reduced the cost of driving.
A car is not like other fixed properties since it depreciates once you drive it out of the automobile yard. By taking a loan to buy a car, you will be paying monthly for something that is losing its value. Similarly, if you buy with cash, you will have invested in something that starts losing its value immediately. Clearly, investing in something that depreciates does not look like a prudent decision.
Leasing is different from buying because you will only be paying a monthly charge for using that vehicle for a specific period, which typically ranges between 24 and 36 months. At the end of any lease agreement, you will take the car back to the leasing company.
The monthly payments on a car lease are smaller than the vehicle loan installments. In addition to the lower payments, most lease agreements require just a small initial deposit that often amounts to three monthly installments.
Car leasing allows you to drive a car that you may not have felt comfortable to purchase using your money. Since a car lease only involves paying for the services rendered by the car while you are using it, it is possible to use a superior car model than you would be comfortable buying. What’s more, if the motor vehicle manufacturer’s guarantee covers the entire period of the lease, you will be exempted from the car’s maintenance cost and road tax.
You will not need a large capital outlay or car loan to own the car of your dream. With a fixed price motoring, the cost of using the car remains constant during the lease period. A lease also gives you the opportunity to drive a new car almost after every two to four years, which offers safety benefits, fuel economy, and high performance.
What to consider when leasing
There are factors to consider when leasing a car. Some of the issues to look into are the supply and demand of cars, seasonal factors, the residual value of the car, your economic status, and the factors in the lease market.
All popular car models are usually availed for lease in the market. However, those models that depreciate at the slowest rate are most attractive in the markets. Choosing a good leasing company and understanding their terms before engaging with them is also critical. This is because each leasing company is different from the others in the way they run their leasing business. As a result, some are attractive while others won’t provide satisfactory services. Gathering market information before signing any contract is beneficial as it will help you understand how the lease market works.