Car leasing. What is it?
Recently, a situation has become increasingly common when a simple citizen or his company needs a car, and financial capabilities do not allow paying the entire amount for it at once. For this case, there are two options for purchasing a car. The first is to take out a loan. However, often on the first trip to the bank, this option fails. For loans, there are very strict conditions in the form of a crystal clear credit history, the provision of a guarantor or collateral and fairly high rates. The second option is to lease a car . This method of purchasing cars has been gaining popularity over the past 15 years, due to a fairly large number of advantages compared to a bank loan, both for individuals and legal entities.
What is car leasing?
At its core , leasing service means getting it on lease for a long time with the option to buy it back at the end of the contract. Everything is extremely simple here. The lessor company buys the transport that the client needs and leases it to the lessee (end consumer).
There are two types of leasing for motorists:
- Financial. This is the closest thing to a loan. According to its terms, the car is purchased. After making the last installment, the transport becomes the property of the client.
- Operational. It’s more like a rental. At the end of the period specified in the contract, the object passes to the lessor company.
Getting a car on lease is quite simple:
- Find a car to your liking. It can be either a new car or a used one, or even several options for companies looking to expand their fleet.
- Choose a leasing company that has extensive experience, high reliability and good customer reviews. Submit an application and wait for approval. Unlike banks, which will make you wait for a decision from 3 to 6 weeks, it will take about a day to approve a leasing company.
- Enter into a contract.
- The lessor company buys the car and leases it out.
What do you need to know about the contract?
- Leasing subject. The brand, model, quantity, seller, equipment and other characteristics that the client wants, for example, color, are indicated.
- Term. With reservations regarding the possibility of extension.
- Advance payment.
- The amount of monthly payments.
- This is a financial or operational leasing option.
- Insurance events.
- The rights of the lessor in case of violation by the lessee of the terms of the contract.
- Right to early termination of the contract.
- Terms of payment for maintenance and inspections.
At first glance, it seems that there are many nuances, but cooperation with an experienced lessor company will actually turn out to be simple and convenient, since consultants will tell you about all the conditions and cost of services in an accessible form.
Benefits of car leasing on grandprixmotors
If we compare, take a loan or lease a car, then the latter option will have a lot of pluses and advantages:
- Loyalty requirements. As mentioned above, leasing companies do not need a credit history as clean as a baby’s tear, guarantors or collateral.
- Price. The benefit is as follows: large lessor companies cooperate with dealerships and receive discounts, which means they purchase cars at competitive prices.
- Registration in the state authorities, maintenance, insurance, etc., is always assigned to the actual owner of the car, and it is the lessor company, therefore the client saves his money and time.
- The interest rate is much lower than that of banks.
- For legal entities of lessees, a leased car is not taxed, since it is not their property, and all maintenance costs are written off as expenses – it is very profitable.
- Possibility to extend the lease term.
- Possibility to rent a used car. This service is not provided by banks.
Only the impossibility of tuning or airbrushing and the risk of losing a car and funds in case of non-payment can act as disadvantages. However, the latter will also threaten lending.
In any case, it is necessary to weigh all the pros and cons. You can lay out a huge amount right away, try to get a loan from a bank or lease a car and become its owner in a couple of years.