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Posts Tagged ‘Leasing A Vehicle’

One of the major bonuses of leasing a vehicle versus buying a vehicle is that you’re almost always covered under warranty, though it depends on the make of vehicle you purchase, and the manufactures warranty it comes with, because with some companies you may have a year of not being covered if you go for a four year lease as some car companies only offer 3 year 60,000 km warranty coverage on their vehicles. However, some of these vehicles that have 3 year 60,000 km bumper to bumper warranty also have 5 year 100,000 km power train warranty, which is still a major asset if something goes wrong.

Many car companies are extending the length and available kilometers of their bumper to bumper warranty so there is a very good chance that you will be able to find a vehicle that will be covered for the whole time you are leasing it. This is quite beneficial because it means that if you are always leasing rather than buying vehicles, then you won’t ever have to worry about major maintenance costs that come with owning an older vehicle that is not covered under warranty. Some such expenses include brake work, new tires, coolant flushes, engine components, body work if the vehicle has bad rust issues, and so on.

While you are leasing a vehicle, the only maintenance issues you really need to be concerned about are regular oil changes, the occasional tire rotation and perhaps some new wiper blades or a refill on your washer fluid. Things like these are required to keep your vehicle in tip top shape, and will help to ensure there are no extra expenses when you return the vehicle.

If you don’t take care of the regular maintenance however, your vehicle may have problems that you won’t notice until it’s too late and then you may end up having to pay for damages when you return the vehicle at the end of your lease. There is a certain monetary amount of damages (or “wear and tear”) the vehicle is allowed to have when you return it, but if you go over that amount you are going to have to pay to have the problems fixed. For example, you can’t return the vehicle with a cracked windshield, though a small chip in the glass would likely be acceptable. The important thing is to take care of the vehicle like it’s your own, and then you shouldn’t have anything to worry about it when you return it.

Leasing has become a very popular way of financing a vehicle. This auto lease guide answers three of the most popular questions asked by those who are considering leasing a vehicle.

1. How do I know if leasing is right for me?

Would you prefer to drive a new vehicle every two to three years?
Would you like lower monthly payments?
Do you prefer an auto that is always under warranty and cost less to maintain?
Do you drive less than 15,000 miles per year?

If you answered yes to the above questions then leasing is a great option for you.

2. What is the best vehicle to lease?

When you lease you pay for the use of the vehicle or the depreciation value. European and Japanese vehicles tend to have a lower depreciation than American made vehicles and are therefore less expensive to lease.

3. How do I get the best price for an auto lease?

An auto lease is always negotiable. Before you sign the lease agreement get at least three lease quotes from different lease companies for the exact same vehicle. This will give you a good idea of the price range you could expect to pay for the vehicle. Ideally you will want to negotiate a price that is closer to the lower end of the range.

The end of the month is the best time to lease a vehicle. Car dealers have a monthly quota they need to meet and during the last few days of the month salesmen are more willing to negotiate a lower price in order to make a sale and meet their quota.

You may have come across one of the many van or car leasing deals offering ‘unlimited mileage’. Sounds great, but how do they work and are they as good as they sound?

Vehicle leasing expert Jane Ramsey explains “These deals do sound good on the face of it, but as with most things in life, if it sounds too good to be true, it usually is and there is a catch!”

One of the finance packages used when leasing a vehicle is called Finance Lease. This is where a business leases a vehicle over a set period and at the end of the lease there is a balloon payment, that the customer is responsible for.

‘Unlimited Mileage’ deals are essentially Finance Lease and unlike other types of finance, there is no direct excess mileage charge. This does not mean that the mileage is ‘unlimited’ though as there is a residual balloon figure which is based on a set mileage.

For example, if the Finance Lease is set up on the standard 10,000 miles per year when you actually do 30,000 miles per year, you can guess that a vehicle with 90,000 miles on the clock will be worth substantially less than one with just 30,000 on the clock.

Herein lies the problem. If you have been sold an ‘unlimited mileage’ lease and you do more than the mileage stated on the contract, you can pretty much guarantee that the vehicle will not be worth the balloon figure at the end of the lease.

This means that you have to pay the difference, so in effect you are paying for the additional mileage anyway.

Another issue

The second issue, which is not always pointed out, is that the customer is also responsible for selling the vehicle at the end of the lease.

Unlike Contract Hire where you just hand the vehicle back, you have to find a buyer for the vehicle and pay the finance company the balloon figure.

So where does Finance Lease work?

We would recommend Finance Lease to builders or trades people where vans may have a hard life and it would not be worthwhile paying the damage recharge if it were on Contract Hire.