This presentation explains all the details about vehicle leasing. The points covered in this presentation are Vehicle leasing, Rationale, Lease agreement, Personal Leasing & Business Leasing.
2. Vehicle leasing
Vehicle leasing is the leasing (or the use of) a motor vehicle for a fixed period of
time. It is commonly offered by dealers as an alternative to vehicle purchase but is
widely used by businesses as a highly cost-effective method of acquiring (or
having the use of) vehicles for business, without the usually needed cash outlay.
The key difference in a lease is that after the primary term (usually 2,3 or 4 years)
the vehicle has to be returned to the leasing company for disposal. Most consumer
vehicle lease agreements are closed-end leasing arrangements. Closed-end leases
are sometimes called "walk-away" leases, and are most common for consumer
leases today. This type of lease allows you to simply return your vehicle at the end
of the lease and have no other responsibilities other than possible payment of
excessive damage or mileage charges.
3. Rationale
Vehicle Leasing offers advantages to both buyers and sellers. For the buyer, lease
payments will usually be lower than payments on a car loan would be, and
qualification is often easier. Some consumers may prefer leasing as it allows them to
simply return a car and select a new model when the lease expires, allowing a
consumer to drive a new vehicle every few years without the responsibility of selling
the old vehicle. A lessee does not have to worry about the future value of the
vehicle, while a vehicle owner does. Leasing companies do however require the
lessee to carry liability insurance coverage's often higher than many people choose
when they insure an owned vehicle.
For the lesser, leasing generates income from a vehicle the lessor still owns and will
be able to lease again or sell through vehicle remarketing once the original (or
primary) lease has expired. As consumers will typically use a leased vehicle for a
shorter period of time than one they buy outright, leasing may generate repeat
customers more quickly, which may fit into various aspects of a dealer's business
model.
4. Lease agreement
Lease agreements typically stipulate an early termination fee and limit the number of
miles a lessee can drive by the end of the lease term. For passenger cars, a common
number is 12,000 - 15,000 miles per year on average. If the mileage allowance is exceeded
at the lease end, excess mileage fees usually are assessed (on closed-end leases). In the
U.S., the excess mileage charge is usually between $0.10 and $0.25 per mile. For
example, suppose a 36 month lease specifies a maximum of 36,000 miles and a charge of
$0.15 per mile over the maximum. If the car's odometer displays 39,000 miles at lease
end, the excess mileage charge will be $0.15 x 3,000, or $450. Open-end leases typically do
not include an excess mileage charge. Dealers will typically allow a lessee to negotiate a
higher mileage allowance, for a higher lease payment. Lease agreements usually specify
how much wear on the vehicle is allowable, and the lessee may face a fee if that amount
of wear has been exceeded. A lease with maintenance (commonly known in the UK as
Contract Hire) can include all vehicle running costs excluding fuel and insurance.
The actual lease payments are calculated in a very similar way to loan payments, but
instead of an APR, the company uses something called the money factor which is
explored below.
At the end of a lease term, the lessee must either return the vehicle to or buy it from the
owner (leasing company). The end of lease price is usually agreed upon when the lease is
signed which may or may not be the Residual Value.
5. ABOUT LEASING : Personal Leasing & Business Leasing
"If it appreciates, buy it. If it depreciates, lease it" John Paul Getty
Vehicle Leasing and Contract Hire are wise ways to manage your motoring. When an
individual or a company purchases a car or van, they pay a full price to run a vehicle
whose value is constantly depreciating. To get the best value from that initial
outlay, you must run that vehicle for its full lifespan. That means driving around in
an older vehicle with increasing maintenance costs and decreasing appeal.
Lease a car or van, and you only pay for the part of its life that you use. If you choose a
car that costs £12,000 today and will be worth £5000 in 3 years' time, then you are
only funding the difference of £7000. You then make equal monthly payments for the
duration of the contract and at the end, you hand the car back with no worries about
re-sale or trade-in values.
Business Leasing and Contract Hire makes sense for companies who manage fleets of
cars. They can reduce their depreciation and maintenance costs while their newer
fleet presents a better corporate image and makes for a happier workforce.
6. For more information on Vehicle Leasing visit:
http://www.firstvehicleleasing.co.uk/about-car-leasing
http://en.wikipedia.org/wiki/Vehicle_leasing
For Vehicle Leasing visit:
http://www.firstvehicleleasing.co.uk/
For special offers on Vehicle Leasing visit:
http://www.firstvehicleleasing.co.uk/special-offers
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