manual - The Many Sorts Of Vehicle Leasing To Select From For ...

Businesses are offered a few different types of car lease. Understanding a car lease is the first step. The largest part of the lease cars is depreciation. This is the basis for the lease. The depreciation defines the amount of monthly payments. The amount the value of the car decreases during the lease period is the depreciation.

There are some interesting facts about depreciation. The payments will be much more expensive if the car depreciates rapidly. This is good for the company that is the lessor. If a car depreciates slowly, the payments are much lower. This is beneficial for the business that is the lessee. An important aspect of depreciation is the condition of the economy. Other depreciation variables are the make, model, and year. A vehicle depreciates more rapidly at the beginning of its life. It is generally more even after that. Open-end leases are used primarily for businesses. An open-end lease means if the vehicle depreciates more than anticipated, the business must pay an additional fee. A customer can simply walk away at lease end with a closed-end lease. It does not matter if the vehicle has depreciated more or less than anticipated. This type of lease is usually offered to individuals only. If a leasing company does offer closed-end leases to businesses, this should be an important consideration.

Business contract hire is one type of lease businesses is offered. This type of car leasing is very common. The length of this type of contract can be from 1 to 5 years. The details of this contract are designed to fit business needs. Contract hire leases are available with or without a maintenance agreement. This type of contract has a few different advantages. It does not appear on the balance sheet. It usually has a fixed interest rate. A depreciation risk does not exist. This is the responsibility of the leasing company.

A lease purchase is another type of lease. A lease purchase has some strengths and weaknesses. The deposit on this type of car leasing is smaller. It also generally has lower monthly payments. Instead, the company may put these funds back into the business. One of the disadvantages comes at the end of the contract. This is when a large balloon payment will be due. It is important to make sure the business will have this money available at that time. Payment due at lease end is the anticipated future value of the car. The vehicle then becomes the property of the lessee. If the vehicle is used for business purposes only, it may reclaim the VAT.

An additional type of lease available is a finance lease. A finance lease is a tax efficient choice for businesses. The vehicle remains the property of the company that is the lessor. This type of lease does appear on the balance sheet. The monthly payments and interest rates are usually fixed. The most important factor of car and leasing options is to completely understand what choices are available. The information will determine what the best choice for the business is. A second important factor is to completely understand the lease before signing it. If not, the business can get into financial difficulty. The reason for leasing vehicles is forward progression of the business.

Source: http://www.autoinsuranceestimatequotes.com/blog/auto-insurance/the-many-sorts-of-vehicle-leasing-to-select-from-for-companies

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