While leasing is vastly different from purchase, your car lease options within the scope of the lease process are distinct in themselves. As is expected, there are differences in car lease terms and car lease rates, but there are others to be aware of. This includes knowing the difference between a short term car lease and a long term car lease as well as between a personal contract purchase and a personal contract hire. Consider the following car lease options. By knowing what is available to you, you should gain a wider knowledge of the leasing process as a whole.
Your main lease options, assuming your credit score and other personal factors do not limit your choices, are the following: short term lease, long term lease, personal contract purchase, personal contract hire and a lease takeover.
A short term car lease is typically defined as one that lasts no more than 36 months. This type of lease is beneficial for a number of reasons. Since you agree to only drive the car a certain number of miles or less during the lease, with a short term lease you likely will not go over that amount. AUpon returning the vehicle, you should not have to pay anything due to increased depreciation. Plus, the car will remain under warranty the entire time you have it.
A long term car lease is most beneficial if you plan on buying the vehicle at the end of the lease. Not only have you paid more on the car’s value over the additional amount of time, but its residual value has gone down, making the balloon payment you owe at the end of the lease lower. However, if you plan on keeping a car for the long term, buying is the better option.
This type of lease deal allows you to drive a car for the specified time of the lease and gives you option of purchasing it at the end of the contract. If you decide you want to keep the car, you can make one single payment to buy the vehicle or refinance the amount. You can, however, opt to return the car as well and only pay any assessed fees.
This is essentially the same as the personal contract purchase, only you don’t have the option of buying the car at the end of the lease. You return the vehicle, pay any fees or sometimes receive a rebate if the value of the returned car is higher than estimated.
Rather than come up with the money for a down payment yourself, you can find a current lessee from whom to take their existing lease. You assume the terms of the contract in this arrangement, so be sure what you’re getting into. It is, however, a great way to get into a car without coming up with a lot of initial money.
Know your lease options before deciding which type of car lease is best for you. It all depends upon the type of monthly payment you wish to make and your desire to own weighed against your desire to frequently trade over vehicles.