Car Lease

A car lease is the preferred choice to buying for many individuals and companies requiring the acquisition of new cars. There are a number of reasons why a car lease is the preferred method of car transactions for both the lessee and the lessor. One of the key issues surrounding a car lease is that the person who is the lessee does not own the car and at the end of the car lease term must give the vehicle back to the lessor.

A car lease can offer advantages over buying a new car out right. For example, with a car lease there are no lump sum upfront payments whereas with buying a car usually at least a third of the purchase price has to be paid in advance with the balance paid monthly via a car loan or a bank loan. Monthly payments on a car lease are usually lower than repayments on a car loan because a car lease is a mix of rental and depreciation. After three years a car lease usually expires and the car is either returned to the car dealer or the lessee buys the car for a price that was agreed when the car lease was first taken out. A point to consider if you wish to terminate a car lease agreement before the car lease agreement has expired and that is the cost of penalties for terminating the car lease.

At the end of a car lease term you can return the vehicle and can drive away with a new car lease in a new vehicle. Some people like to change their cars often and want a new car lease because they love the feel of a new car. With a car lease, there is a balance to be struck between convenience of the lessee having a new car and the risk to the lessor that the new car will devalue too quickly over the three years. Often, a car lease will set limits to the number of miles that the lessee can drive without incurring financial penalties from breaking the terms of the car lease contract.

Some car lease contracts have a wear and tear clause so that dogs and children do not wreck the upholstery. There may also be a clause in the car lease contract preventing a tow bar from being fitted. Sometimes, a car lease contract will stipulate that a deposit of one or two months' payments has to be paid and that other costs must also be paid such as the tax disc. Even though the person who is taking out the car lease does not actually own the car, the person who took out the car lease is entirely responsible for fully comprehensive insurance and for any parking tickets and speeding fines.

The decision whether to set up a car lease for both the lessor and the lessee is a fine balance, but for some people who love to drive an expensive new car, the car lease option is the swiftest and cheapest route. The main things to bear in mind when taking out a car lease are that the lessees can use the car for a set number of months and that within the car lease agreement is a clause stating that the person who take out the car lease has the right to use the car for a pre-set number of miles. Usually, the lessee within a car lease agreement has the right to buy the car at the end of the car lease term. The lessee, while the car lease is in operation, has the right to utilise any free warranties.

It can be quite easy with a car lease to exceed the maximum mileage as most cars within a car lease contract have a maximum number of miles that can be driven over the period of the car lease. It should be written in the car lease what the penalty charge is for excess mileage during the car lease period. Another thought to consider during the car lease period is the wear and tear and the type of wear and tear that is expected during a car lease term. Another point to consider during the car lease term is the charge for tyre wear.

It should be clearly stated in the car lease contract what the charges are if the car lease contract has to be terminated before the end of the car lease agreement. Of course, any charges for terminating a car lease agreement in advance should be on a sliding scale.