Car leasing overview

Car leasing is becoming a common method of acquiring a car nowadays.  With car leasing, you can readily drive the latest car model you prefer even if you do not have enough money to purchase one.  You would only be required to give reasonable monthly payments which you and the leasing company have agreed with.  If you are interested in leasing a car, then it would be more beneficial on your part if you have basic knowledge on this procedure to be able to have a great deal.

What is Car Leasing?

Car leasing is actually the leasing of a vehicle for a period of time. It is a practical method or alternative to vehicle procurement.  When you lease a car, you are required to give a monthly payment corresponding to the estimated depreciation cost of the car.

What is Depreciation?

Basically, depreciation is the decrease or decline in value of a particular asset.  In car leasing, the depreciation cost is equal to the original value of the car less the residual value.  Residual value is actually the value of the vehicle at the end of the leasing period or more commonly known as resale value.  As rule of thumb, if you want to have a lower monthly payment for your car lease, choose a vehicle with lower depreciation and higher residual value.

Luxury vehicles manufactured in Japan and other European countries are known for their lower depreciation compare to those manufactured in America.

Opt for Short Term Leasing

Generally, you can avail car leasing either for short term or long term depending on your needs and preferences. Short term car leasing often lasts for less than 12 months up to 36 months. If the leasing period goes beyond 36 months, it is considered as long term leasing.

One should opt for a short term car leasing to have lower monthly bills. If you go for longer term, the residual value of the car will decrease pretty much resulting to higher depreciation. Moreover, with short term leasing, you can optimize the warranty and have lesser chance of shouldering the maintenance.

Signing the Leasing Contract

Once you have found a great deal with a leasing company, you are then obliged to sign the leasing contract.  This contract signifies your relationship with the leasing company.  The car dealer has no direct involvement in the leasing contract. The dealer’s concern is primarily the vehicle’s performance.  As much as possible, avoid engaging with leasing companies that have connection with auto dealers. You are likely to pay much more because they are subsidiaries of these auto dealers.

 Interesting and useful information for you could be that the Danish term for company car is firma bil.

When you have signed the contract, your responsibility in paying the monthly dues, taxes, insurance and taking good care of the vehicle begins. You will now take in charge in keeping the vehicle for a period of time as stated in your contract.  When your car leasing period is over, you are expected to return the vehicle and pay whatever excess mileage or additional wear and tear you have incurred.