| By :
Dirik Hameed
If you need to get a vehicle there are two options available to you, you can buy one outright or lease one through car leasing, often with the option of buying it at the end of the lease period. Vehicle leasing is a good way of financing an asset that depreciates in value. With a car lease or vehicle lease you do not own the vehicle rather you pay to use it. A typical lease period is two to five years. After this time most people return the vehicle to the leasing company but you have the option to renew the lease or purchase the car. Most people choose to return the car after the lease period as you are then able to lease a newer model with less wear and tear. 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. The value of the use of the car plus finance charges and additional costs are paid up front, the remaining amount is calculated in monthly charges. Car leasing is generally cheaper than having to finance and pay for a new car as you're only paying for part of the car's value (the part that you're using during the lease period). Since monthly payments for car leasing are cheaper than for car buying, people can do vehicle leasing for a more expensive car than they can actually afford to buy. All contracts have pros and cons and car leasing is no exception. One big pro is that maintenance is usually not a problem as new cars are generally leased over the older models. 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. Another fantastic advantage is the availability of access to new vehicles. This is because you can choose when the lease expires and are then able to lease a newer car with car and leasing. The relatively low monthly payments are good for tight budgets, but leasing is more expensive over the long term than buying a new car. In a leased vehicle you may require a more comprehensive insurance package, and you are not able to modify the car in any way as you do not own it. This needs to be taken into account when looking at leasing a vehicle. As you are participating in a lease the monthly repayments will be subject to your credit score and may alter from lease to lease. Additionally you will be tied down to the amount of mileage you are allowed to do in the car. Any additional mileage will be charged at the end of the lease.
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