Most people are already aware of car leasing and some benefits it can bring to those who choose it over car buying, but if you are interested in a lease package yourself, it would be in your absolute interest to know what it is really all about – not just because it’s a big decision, but also because it can impact your life in the next few years. Vehicle leasing or contract hire agreements work in just the same way as renting or hiring a vehicle for a day or a weekend; the only major difference is that you will hire or rent the car for a longer time, usually from 24 months up to 36 months. But what else can a contract hire or lease agreement bring to the table? Here are the top reasons why you should lease instead of buying a vehicle.
How it works
The agreement is simple; in most cases, what you see is what you get. Essentially speaking, you will agree to hire a car or other vehicle for a set period and pay a fixed cost per month for its use. The provider will retain vehicle ownership for the terms of the contract, and at the contract’s end, you will simply return the vehicle to the provider. The rental fee per month is fixed, and it will include the car’s cost, the car’s depreciation, the length of the contract, and the total mileage. If you exceed the agreed-upon mileage for the deal, you will have to pay an additional charge. This will then be computed on a pence-for-every-mile basis.
If you opt for maintenance along with the lease, it will cover routine or standard servicing for the vehicle along with some repairs. You can enhance this even further, so it includes breakdown coverage and 24-hour assistance.
The top reasons why you should lease instead of buy
- A low outlay
Most contract hire agreements will require an initial payment or outlay, but this will be a lot less than paying a down payment for an actual car that you buy. Providers may ask for about three months of initial payment (equivalent to the rental of the vehicle per month times 3).
- No more need for negotiations
Since many car lease and contract hire providers buy no fewer than 10,000 to up to 30,000 cars or vehicles annually and spend a lot of money on maintenance, you can already get the best deal available simply because they have already negotiated it for you.
- Better value for your money – and no more risks associated with disposal
When you lease a vehicle, you only have to contend with the fixed monthly rental, giving you greater control over your budget and finances. You will also remove the risks associated with disposing of the vehicle when you want a new one; you don’t have to advertise the vehicle to sell it, and you don’t have to haggle over the price the way you would do if you had to sell your own car to another person.
Since you are leasing, you can also keep your main credit lines open since the vehicle you have is not counted as an asset. You can then use your main credit lines for other expenses, such as operational funds for your business or investing in necessary equipment.