Now, if you want a car to drive but do not have sufficient funds to buy one or make a large down payment, you can opt for car leasing. In simple terms, the meaning of car leasing means you can rent a car or a vehicle from a reputed leasing company. There is no need for you to make large down payments to get the car. The leasing company will give you the option to pay small installments every month to drive the leased car.
Omari Betts is a sales and leasing consultant at ChevyChaseAcura in Maryland, USA. He says that there are certain types of car lease you should know. There is the closed- end lease and the open- end lease. Therefore, if you are going in for car lease, you must understand what the difference between these two are!
Understanding car lease
In the case of the closed- end lease, you can return the car after the lease term ends or just walk away or you need to conform with the terms and the conditions of the lease to avoid paying the penalty charges. Like for instance, if you have exceeded the maximum limits of mileage, you should pay extra fees for the additional mileage you have incurred. Once the term of the lease ends, the car is checked when it is returned back to the leasing company. Another aspect of the car that is checked is the amount of wear and tear that you have made to the vehicle. If this wear and tear is beyond the acceptable limits laid down in the contract, you need to pay extra charges.
Option to buy the car
You also have the choice to buy out the car at the residual value. The price of the buyout should be clearly mentioned in the leasing contract when you have entered into an agreement with the car leasing company.
Know what an open-end car lease is?
The open-end car lease is a specific type of lease that is given for businesses. Here, the lessee pays for the difference between the residual value of the car that has been pre-determined and the market value of the vehicle that has been determined when the lease of the vehicle ends.
Advantages of car leasing
The biggest advantage of car leasing is that the car has an upfront cost that is minimal in nature. If you take a look at most companies in the market today, you will find that most car leasing companies need the lease payment for the first-month and a security deposit. Mr. Betts says that if you buy a car, you would need to spend a large sum of money. The down payment needs to be paid to the lender who gives you the car loan. If you check the lease payments every month, you will find they are much less than the payments you make every month to buy a car. The reasons are obvious, you are just renting the car and not buying the car says Omari Betts in the case of a car lease!