Auto Finance - Benefits of Leasing

Auto manufacturers go to great lengths through their website and through the individual dealerships to stress the benefits of leasing a vehicle, and in particular trying to make individuals aware that leasing a vehicle is of benefit to private individuals, and is not simply some type of corporate expense or add-on.

It might be helpful to consider the idea of leasing any vehicle as similar to that of renting one, or hiring one. Most people are familiar with car hire and car rental processes, and in some ways leasing a vehicle is quite similar except it is on a long-term basis.

The costs involved can be fairly similar to that of purchasing a vehicle outright, the real benefit being that the individual is effectively buying a new car in a way that would be impossible if they were to purchase it outright.

When leasing a car, the main decision at the end of the day is simply a numbers one, as to whether it makes more sense financially than to buy one on finance or credit. To understand this it is worth examining in detail the costs involved when deciding to lease a vehicle.

Firstly check out the main manufacturers website for the country where you live. Companies periodically offers special deals on specific cars, and often offers specific deals on leasing specific cars that may be relevant for where you live.

Once that is done then it is important to understand the principles involved in the costs of leasing a vehicle. There will be a down payment required for the car, and a fixed monthly payment for the specified period of time of the lease, this is likely to be between 24 and 60 months.

In addition to a down payment, there are likely to be what are known as dealers fees which can cover a number of costs payable at the outset of the lease.

These can be quite considerable, and should be clarified and specified by the dealer at the outset of the process. There should be considerable room for negotiation with a number of these dealers fees, as they supposedly relate to costs the dealer has incurred, the majority of which can sometimes be quite inflated.

The lease should also specify what happens at the end of the lease. There will be a number of costs involved in terms of making sure that the vehicle is in a reasonable condition and does not need any major work either structurally or mechanically. There should be an allowance for wear and tear provision over the period of the lease and this should be specified in its terms and conditions.

There should also be provision for what happens when the lease ends, either by way of trading the vehicle in or agreeing an extension of the lease or agreeing a new lease on another vehicle. Whilst all these will be determined at the end of the lease, specifically in terms of costs, the dealership should be able to give you an idea of what sort of sums are likely to be involved given their experience and history on offering vehicle leases to other customers.

Once the individual has a real idea of the costs involved, they should be in a realistic position to assess the value and benefit of leasing a vehicle as against buying one outright or buying a used one at a lower cost.