Tag Archive | "car leasing"

Introduction to car leasing


Buying a car is of course a big decision to make. Cars are expensive, and many car companies seem to make it their mission to throw confusing and complicated finance options at you in a bid to suck you into what can often be a misguided decision – which may even cost you more than you need to pay. However, if understood correctly and in plain English, many car finance options can help make the purchase easier, as well as helping you stay in control of your finances. One of those options is car leasing.

Car leasing is, in its simplest form, like renting a car. In other words, the leasing company retains ownership of the vehicle and the buyer pays monthly payments for its exclusive use.

That’s the first part of leasing, and in some cases may be the only part: with monthly payments being made until the term of the agreement ends. The monthly price will be comprised of the car value, depreciation and a level of interest.

Some leases have two parts though. These include the first part that we’ve just mentioned and a second stage. The second stage takes place at the end of the lease agreement, where the buyer will have the option of paying a final payment – to pay off the remaining residual vehicle and take full ownership. This is sometimes called a balloon payment. Depending on the agreement this isn’t always compulsory, though, and the buyer can decide not to pay it and not take ownership of the vehicle, which will mean the car is then returned to the leasing company.

As with most sizeable purchases where you don’t pay the full price in one lump sum, you’ll need to pay a deposit. This is often described as ‘3 upfront’, whereby the agreed monthly payment is multiplied by three to calculate the deposit. This amount usually will be broken down into 3, 6, or 9 payments up front as the deposit with the amount you pay up front reducing the monthly payments.

In its simplest terms, that’s the main thing to know about leasing a vehicle. However, there are often restrictions and it’s important to fully understand these before signing on the dotted line. A number of the restrictions are optional – for example, if you pay a higher monthly rate then you can choose to have the car’s MOT and servicing included. Likewise, you will need to set a limit on the number of miles you’ll be driving in the car each year – the higher the mileage, the more you’ll pay each month, as the car will be worth less should you return it to the company at the end of the agreement.

Don’t be put off by the varying terms used for vehicle leasing. Contract hire, contract purchase and lease purchase are all examples of vehicle leasing, but they all have slightly different permutations. Some – as you can tell from the name – include compulsory purchase by the buyer, others include the cost of servicing and some include numerous options for maintenance. As with any vehicle purchase, the most important thing is to make sure you fully understand what you’re agreeing to when you sign the paperwork, and also what the total price you’ll be paying is.

That said, vehicle leasing is an affordable, risk-managed way of buying a car, and offers an excellent alternative to outright purchase. The extra price paid in total can arguably be offset by being safe in the knowledge of maintenance being included, or by many of the other numerous options.

 

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To Lease Or To Buy A New Car?


Although it is by no means an essential purchase, buying a new car is an appealing prospect to anyone who likes driving. It’s something that most of us aspire to doing but there’s a snag. It’s called money. There are a variety of leasing options open that make sense to business users but does it work for the private individual?

A lot depends on how an individual feels about his or her financial security. Money can be saved and the full purchase price paid. The car is yours. Or money can be borrowed from banks or finance companies and the car is yours once those funds have been repaid. Both these options are usual and accepted but at the end of it all the buyer is left with a used car that will have lost a considerable portion of its value over the first two or three years. Some cars depreciate so much that there may not be enough value left to finance even a deposit on the latest offerings and so the cycle begins again.

So is it better to lease a car? A lease car never belongs to the customer so it perhaps wouldn’t suit someone who likes to feel ownership. The beauty of such a scheme though means that, although at the end of the contract term a customer has nothing to show for the financial outlay, it does mean that swapping to a new car is easy without all the rigmarole of part-exchanging or selling on the unwanted vehicle.

Personal contract hire is essentially a long-term rental agreement. The client pays a deposit and then a fixed monthly amount for the agreed life of the contract. At the end of the period the car is returned and an arrangement can then be made for the next new car. Some schemes also have the option to buy the car at the end of the period. Most will be governed by a reasonable mileage limitation.

The suitability of schemes like this is dependent on personal circumstances. High mileage users and individuals who can’t demonstrate the stability of finances that a steady job brings would not be accepted. Otherwise, if a new car every two or three years appeals – especially a prestige model that might otherwise be out of reach – then contract hire might just fit the bill. It is usually possible to cost maintenance expenses into the deal as well which helps annual budgeting.

At the end of the contracted period you give the car back and that’s that. Another contract can be organised or, in some circumstances, the customer can choose to buy the car. Obviously a contract like this requires a certain amount of responsibility on the part of the hirer. The company will want to see that the car has been properly looked after and that it is returned with no more than the sort of wear and tear that would be expected on a two or three year old car. Knock it about and it is going to be expensive.

Do your homework. Look into depreciation costs and see how the money lost on a new car purchased relates to the contract cost of a leased vehicle. Instead of owning a depreciating used car you could be driving a new car that is permanently under warranty!

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Top 5 lease options for your company


There are numerous car leasing deals out there for all kinds of businesses, but if you really want your employees to make the right impression while they’re representing your firm, I think you should consider one of the following five models to offer as a company car.

BMW 5 Series Touring 520d SE

When What Car? reviewed the latest models in the BMW 5 Series range, they selected this vehicle as the best of them, describing it as “an extremely good car”. The 5 Series also got picked as the third-best executive motor of 2012 by Auto Express.

So, what makes the vehicle stand out? As you might expect from a BMW, it is engineered and finished to a high quality, so you are practically guaranteed a comfortable, smooth and stylish drive.

Audi A4 TDIe

Audi has been making a name for itself as a great business car for some time now and, although it isn’t right at the top, it’s certainly not far off. Business Car Manager commended the Audi A4 TDIe in the best executive car category at its 2012 awards, while it also received an honourable mention in the 2011 Carbuyer awards.

Business Car Manager highlighted the car’s economical credentials – something that’s bound to be important if you pay mileage for your employees. Carbuyer also praised its eco-friendly engine, as well as drawing attention to its “impressive build quality and carefully-designed interior”.

BMW 3 Series

The new range of motors in the BMW 3 Series have come out on top at numerous motoring awards in the executive car category this year – including What Car?, Business Car Manager and Carbuyer. Described as the best compact executive vehicle on the market, this is certainly one to consider if you’re looking for new autos for your firm’s fleet.

Even the basic model has more than enough mod-cons to keep the most discerning businessperson happy, including Bluetooth connectivity and a driver performance control system. Choose one of the models equipped with BMW’s EfficientDynamics technology and you’ve got a ride that is economical as well as comfortable.

Mercedes-Benz C Class

The Mercedes-Benz C Class is another vehicle that has picked up nods at several car awards ceremonies this year for its credentials as an executive motor. Its style, performance and range of features that come as standard have all been highlighted as reasons why it deserves to be at the top.

Choosing one of the models fitted with the firm’s BlueEfficiency technology also makes the drive that bit more economical. Among the features included with this setup are an ECO start/stop function, lower displacement engines and lighter alloy wheels, all designed to improve the car’s fuel consumption.

Of course, all of this also translates into reduced running costs and more environmentally-friendly cars, all without compromising on performance, according to the automaker.

Hyundai i40

Moving away from the top-end executive models, there are plenty of excellent, more everyday cars available for companies to hire that work well as company vehicles. Among them is the Hyundai i40, which was named as the second-best company car by Automotive blog in 2012.

The website pointed out that the auto comes with “some truly premium design features”, is affordable, has low CO2 emissions and is fuel efficient, delivering 62.8 miles per gallon.

If you’ve recently signed up for a new business car leasing contract, tell us what model you opted for and why.

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