In this article we look at some reasons why you should consider a car leasing plan when you buy your next car.
What is car leasing? A car leasing plan is, in effect, a way of renting a new car over an agreed length of time.
You don't own the car at any point and at the end of the lease you simply hand it back to the leasing company.
As with other forms of rental, such as renting an apartment, you are asked to put down an initial payment as a deposit - though this is a non refundable cost with car leasing - and then you pay an agreed amount per month for the term of the lease.
Most leasing plans last for two or three years, although you can arrange a car lease for 12 months or even less.
No big cash payments required A car lease plan is not a form of car loan so a big deposit, is not required.
You merely pay a small upfront payment, which is often two months of the monthly rental.
This means that you can keep your capital in a high interest earning bank account and pay the monthly costs as part of your living expenses.
This is particularly beneficial for businesses who can pay the lease costs out of operational, rather than capital expenditure.
Also businesses can reclaim the VAT associated with the leasing costs, whereas VAT on new car purchases cannot be reclaimed.
This saves businesses a considerable amount of money.
The car is always covered by warranty As most car manufacturers offer a three year warranty, your leased car will always be covered by the manufacturers warranty, as long as the lease is for three years, or less, which most are.
This saves a lot of money, worry and hassle as you need only pay for the simple routine services and consumable items such as tyres, and there won't be many of those required during the first three years of a cars life.
Change your car more often If you like driving around in a new car every few years then leasing is a good option for you.
As you don't own the car, you needn't worry about trying to sell it before buying another car.
You just hand it back to the leasing company and have the fun of choosing another car.
So we have looked at several good reasons why you should consider leasing your next car.
There are disadvantages too, which I will discuss in a forthcoming article, but in general, you should give serious thought to leasing, rather than purchasing your next new car.