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Posts Tagged ‘Car Lease’

The availability of easy car finance is one of the prime reasons for the booming sales of the cars year after year. Even the most highly priced cars are available on monthly finance options of different types. This is a global phenomenon. The car loan can be had after paying some sum as part down payment and the rest on monthly instalments.

Some of the most common types of car finance options are: car lease, commercial hire purchase, salary packaging, Low doc/no doc car finance, chattel mortgage, novated lease and even by taking personal loan. The difference between these different methods lies in the title or ownership of the car, the liability to pay the sums to the car company and the tax treatment of the different finance options.

The car loan can be had in any of the different formats depending upon your nature of occupation. For the people employed with some organization, usually the most preferred way is to get the same within the salary package. This can take two forms. In one, called salary packaging, the monthly instalment is deducted from the salary of the employee and paid to the car finance company. The liability to pay lies with the employee and if he leaves the job, he will have to arrange for the new employer to get it packaged in the salary.

For people who want the cars for their trading purpose, like the ones in the tour and travel business, the commercial hire purchase option can be most suitable. With each successive payment, you are paying off money towards the ownership of the car. The money to be paid as instalment can be taken out from the incomes derived from using the cars in business. So, there is no extra burden on the owner. Even if the cars are taken away due to non payment of the instalment amounts, there is nothing to worry for the owner since he has not done any capital investment on it.

The personal loan is taken, at high rates of interest, on the condition that at least half the sum is used for personal purposes and the rest is applied for buying the car. The loan is secured by the financer who takes a charge for this service in the form of monthly instalments.

There are also the situations in which a self-employed person is not able to fetch any income proof of his own, be it salary slip or any other thing. For those people, the car finance can be had if some of the prescribed eligibility criteria are met. The most famous options for this requirement are that of the low doc or no doc finance. This is the most common option of Car Loan available fro people who have low-income self employment.

Each of the financing options has some benefit or the other. These have been designed in such a way as to meet the car requirements of most of the deserving people.

Car lease finance is a great option for anyone who needs a car for employees or business use, or who lacks the finances to make an upfront payment on purchasing a car for their business.

Many however fail to see the point of car lease finance and point out that all that money is essentially ‘wasted’ as they have nothing to show for it at the end of the loan. Of course everyone hires cars when going on holiday and this makes a lot of sense as a way to get around the area you’re visiting and avoid understanding public transport systems in a foreign language. Leasing a car rather than owning one however is a different matter, and one that not everyone fully understands as after a significant amount of time they could likely have almost purchased the car themselves. However this is a rather short sighted view, as a car lease finance saves a lot of money in other ways too.

With a car lease finance you save yourself money on tax, on insurance (if it’s a good loan) and on depreciation. If you don’t have much capital to invest in a new car, then chances are you’d likely buy an old car with a lot of miles. That means that you can expect to pay for a car that has been well used in the past. Add to this tax and insurance (often you do pay insurance, but it’s provided by the car lease finance company and included as one payment for a cheaper price) and you’re looking at up to six months before your leased car has really made a dent in what you would pay for a new car – not counting the cost of the car itself even – and of course none of this money has anything to ‘show for it’ at the end either.

This becomes particularly important when you only need the car for a short period of time. If you just need the vehicle for a few months, then you’ll find that buying a car of your own, even second hand, is much more expensive and a lot more hassle and really isn’t worth it if you intend to sell or scrap the car at the end of the same time period.

A car lease finance has another bonus too – in that by saving money on not buying the car or paying for the insurance you’ll be able to choose a far nicer and newer vehicle than you otherwise would be able to. Drive around in a Mercedes and you’ll get a lot of looks, and no one will need to know it’s not yours. Of course if you want to cut the price even more you can hire an older car and pay less.

Looking for the best deal on your car lease finance then is important and there are a lot of things you need to consider before you sign a contract. First of all make sure that as stated above you won’t be paying any bills yourself. Good car lease finance companies will cover you on the insurance or provide it themselves for a cheaper price and should obviously cover tax and servicing. Of course you will likely also want to look into the exact vehicles they have on offer, and if you’re going to be using the car for an extended period of time you will want to have a test drive to ensure you like it – just as you would with a car you owned.

Of course you also need to look into rates and premiums, so check the competition and look at price comparison websites before you make a decision. Many of these allow you to enter your details and then bring up the best option for you to ensure that you get a deal that suits you and your budget.