To lease or not to lease that is the question

Free Start-Up Articles
Free Start-Up Articles

Car purchase versus leasing. Over the past ten years there has been a dramatic rise in the amount of businesses and individuals leasing cars. In fact nearly one in three new vehicles are leased.

This is because an increasing number of people are realising the benefits of leasing.

When purchasing a new car there is a large capital outlay, even if the purchaser is in a position to buy outright, the capital may be put to better use. The traditional method of purchasing a car would have been to pay a deposit and then monthly payments on a loan.

When leasing you usually pay a small initial payment and then monthly payments. These payments are usually alot less than a loan. The reason for this is that leasing companies purchase cars at a preferential rate from suppliers by buying in bulk. Then the leasing company works out the residual value (the value they expect to sell the car for at the end of the lease.) The cost of the car less the residual value is then multiplied buy a factor. This is for the cost of finance and the leasing companies profit. This figure is then divided by the amount of months the lease is to run. Maintence can also be included in the monthly price.

Depreciation on cars is very high in the first 3 years and the trade in price when you part exchange it for you next car is going to be alot lower than the purchase price. With leasing you just give the car back to the leasing company and lease a new car.If your intentions are to keep the car for over 5 years purchasing does become a more competitive option.

Most car manufactures now offer leasing. There are also leasing companies and leasing brokers who work on a comission basis. They take the best offers from leasing companies and manufactures and offer them to customers.

When buying it is aways important to compare prices as manufactures as well as leasing companies will have special offers and these can change daily.

For further information on car leasing contact MikeSavage@lemansvehicleleasing

Mike Savage
Le Mans Vehicle Leasing