Leasing a vehicle is now becoming one of the most popular routes to the road.
The biggest cost of owning a car is depreciation; although depreciation varies greatly across makes and models, a typical car will lose approximately two-fifths (40%) of its value in the first year. After three years, the average vehicle will have lost around three-fifths (60%) of its initial value.
How leasing works
In a leasing contract, you do not end up owning the vehicle at the end of the contract as you have agreed to pay for its use only. Instead, you pay a fixed monthly amount during the contract term which includes full manufacturer warranty, breakdown cover, and road tax for the duration of the lease with or without maintenance (Servicing, Tyres, Brakes etc...).
In short, when you lease a vehicle you avoid depreciation, and the residual risk is that of the owner (Finance Company). What's more, it's the responsibility of the finance company (as owner) to dispose of the vehicle at the end of the term.
Renting versus buying
Monthly repayments to lease a vehicle are usually lower compared with those payments to purchase one. In some cases, they can even be less than half the repayments for a loan. By the way, it's important to consider VAT, which adds 20% to the monthly rentals paid by private user, but as a business user you can reclaim up to 100% of the VAT.
Please consult the partner who deals with your affairs regarding your individual circumstances.
Some important points to remember:
- A brand new UK supplied vehicle delivered to your door
- Manufacturer warranty cover for the duration of the contract
- Road fund licence included for the contract agreement
- Full breakdown cover for the duration of the agreement
- No MOT required as the vehicle will never be old enough
- No residual value or disposal risk at the end of the agreement
- Up to 100% VAT reclaimable on all vehicles for business users
- Low initial outlay and monthly rentals as you only fund the use of the vehicle
- Fixed cost motoring with no hidden charges
Article supplied by Planet Leasing - www.planetleasing.co.uk