Although business vehicle leasing has been popular for decades, widespread confusion is perplexing about the real benefits of personal vehicle leasing. Many people suggest that this is not attractive to them, because they really will not own a car – and in a country where we like to call things on our own, this can become a particular stumbling block in this process.
However, in recent years, more and more people have been acquiring vehicle leasing (the Finance and Leasing Association recently reported that British dealers sold more cars in the first half of 2010 using leasing than traditional car loans). The following 2 points show why this might be an attractive option for you.
1. Vehicle leasing makes expensive cars much more affordable – one of the main selling points for people who are considering car leasing for the first time is that it allows you to get a car much cheaper (based on a monthly payment) than financing a car through loan or installment purchase.
This is mainly due to the fact that since you do not own the car, you drive it, and most likely you will keep it for 3-5 years, and the finance company will sell the vehicle at the end of the lease for the residual value calculated at the conclusion of an agreement. Thus, you pay the financial company the amount that the car depreciates during this period, instead of paying for owning a car. Of course, they will add interest from above, but this explains why “expensive” vehicles such as Audi are so cheap to rent because they are slowly depreciating, which means that you will pay a smaller amount to a financial company than a car that is fast depreciating.
2. VAT and maintenance costs are minimized — whenever you see company executives driving away, they usually do this in a car from 2 to 4 years, and almost all of them are likely to be funded by a company car. Leasing. There are two main reasons for this. Firstly, car leasing companies avoid at least 50%, and sometimes 100% VAT. Another reason for this is that vehicles are generally less than three years old and have a warranty and often have a maintenance contract. Consequently, maintenance costs are minimized.