Personal Automobile Leasing Simplified
A new or used car is, for most people, one of the most expensive items we may acquire. Many people today are opting for personal car leasing contracts which provide a brand new automobile at a monthly cost that is often much less than it would cost to repay a car loan.
How Personal Car Leasing Works : When you lease a car you never actually own it. You are effectively hiring the car for an agreed period from the leasing company. The car leasing firm is loaning you the vehicle in return for your monthly payments. These cover two things: the depreciation in value of the vehicle and the interest on the value of the vehicle over the period of the lease.
The depreciation in value of the automobile is estimated based upon the anticipated mileage and the agreed lease period which is typically between 2 and 4 years. The value at the end of the contract period is called the residual value. The difference between the residual value and the manufacturers suggested retail price is then covered by the agreed monthly repayments.
The cost of the finance to you is the interest on the vehicle value over the period of the contract. When you take a vehicle on a lease contract it's rather like the leasing firm have given you a loan. Your monthly repayments will therefore include interest on this effective loan amount, which is typically the manufacturers suggested retail price of the vehicle.
Personal contract purchase differs from contract hire in that the vehicle is not necessarily returned to the leasing company at the end of the agreed period. Instead you are given the option to either pay an agreed final sum to own the vehicle or return it to the dealer. This can also be significantly cheaper than outright purchase using a car loan. Personal car leasing or contract hire provides a hassle free and cost effective way for private individuals to drive the vehicle of their choice at affordable prices.
A new or used car is, for most people, one of the most expensive items we may acquire. Many people today are opting for personal car leasing contracts which provide a brand new automobile at a monthly cost that is often much less than it would cost to repay a car loan.
How Personal Car Leasing Works : When you lease a car you never actually own it. You are effectively hiring the car for an agreed period from the leasing company. The car leasing firm is loaning you the vehicle in return for your monthly payments. These cover two things: the depreciation in value of the vehicle and the interest on the value of the vehicle over the period of the lease.
The depreciation in value of the automobile is estimated based upon the anticipated mileage and the agreed lease period which is typically between 2 and 4 years. The value at the end of the contract period is called the residual value. The difference between the residual value and the manufacturers suggested retail price is then covered by the agreed monthly repayments.
The cost of the finance to you is the interest on the vehicle value over the period of the contract. When you take a vehicle on a lease contract it's rather like the leasing firm have given you a loan. Your monthly repayments will therefore include interest on this effective loan amount, which is typically the manufacturers suggested retail price of the vehicle.
Personal contract purchase differs from contract hire in that the vehicle is not necessarily returned to the leasing company at the end of the agreed period. Instead you are given the option to either pay an agreed final sum to own the vehicle or return it to the dealer. This can also be significantly cheaper than outright purchase using a car loan. Personal car leasing or contract hire provides a hassle free and cost effective way for private individuals to drive the vehicle of their choice at affordable prices.
