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Posts Tagged ‘Lease Finance’

When it comes to choosing an automotive financing option for your business, it can seem like a daunting task. There are a large variety of options that you can choose from which can cause confusion. Which option is the best for you? Do the options have any hidden clauses that could cause me difficulty? For example, some of the options require you maintain a shared ownership of your new fleet vehicles until you have paid off the loan in full.

If you want to avoid such unfavorable terms and conditions and just have a straightforward financing option without the headaches (and who honestly wants to have to deal with additional headaches?) you may want to think about going for a standard Car Finance Lease. Instead of first buying the vehicle and then having to pay it off before you fully own it, your financing agreement will be a lease which will make sure that your vehicle will be maintained in proper working order throughout the lease term.

How Does a Finance Lease Work?

Fundamentally, a finance lease is just a rental agreement between you and the lease provider. The lease provider will keep ownership of the vehicle while the lease is in force. However, unlike a conventional lease agreement, the payments that you make on the vehicle will be put towards an agreed-upon price. This means that you will purchase the vehicle in full once the lease is paid off. The advantage for you is that since the lease provider is the owner of the vehicle and not you, the company that provides the lease will have the responsibility of making sure that the vehicle is in good working order. If the vehicle becomes faulty or cannot be used as intended, then the lease company should in most cases transfer your lease to a similar but working vehicle. Please make sure you check the terms and conditions of your lease from your intended lease provider to make sure this is the case.

What Do I Need To Do To Be Eligible For a Finance Lease?

The main condition of finance lease arrangements, as with many other forms of business fleet financing, is that you use the vehicle primarily if not exclusively for business purposes. Depending on the finance lease provider, they will have different minimum business usage requirements. However, if you are looking for a general rule of thumb, you want to ensure that the vehicle will be used at least 50-60% of the time for business. A finance lease is applicable for most types of businesses and some lease providers may also permit individuals who have an automotive allowance from their employer to take out a lease as well.

Finance Lease Options

If you go down the path of taking out a finance lease, there are a few things to consider. These include:

- Over how long do you wish to pay the lease?

- How much will be paid at the end of the lease? (ie: How much is the residual amount?)

- Payment options Some lease providers may also have an option of an extended lease. With this option, as new vehicles become available, you can trade in your old vehicle for a new one on which you continue to pay the lease for a longer term. Also, provided that you meet business usage requirements, there may be some tax deductions that you can take advantage of.

Take The Time To Do Your Research And Find The Best Lease

Each finance lease provider will offer you a different interest rate and financing terms. So take the time to do your research and compare the various options to make sure you get the lease that best meets the needs of your business. Contact a variety of finance companies and lease providers and speak to them, make sure you let them know that you want to a quote for a business lease rather than a personal lease. Also negotiate, it never hurts to ask. After all, you are giving them your business so makes sure they earn it. Things to compare include: interest rates, estimated payment amounts, how long the lease will be for and how much will need to be paid at the end of the lease term. By looking at these different aspects and comparing your options accordingly, you are in a much better position to obtain the best lease agreement for your business.

Caffeinated Content

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.