Are you in need of means of trasportation, but not eager, or financially ready, to own a car but you want to take advantage of lower monthly car payments? There are many different methods of car financing, but one of the most cost effective is private car leasing. However, you might wonder what exactly is private car leasing and how does it work? This small guide to private car leasing will put you in the driver’s seat and will help you in your search to score the best car lease deals.
Private car leasing means that you pay a monthly amount to drive a car, over a pre-established period, usually around two-four years, but the car is never actually yours. Payments are based on the difference between the retail price of the car, what the car is worth when the contract begins, and the residual value, what the car is estimated to be worth at the end of the contract period. Therefore, the less the car depreciates in value, the lower your payments will be. Broadly, a private car leasing agreement can be established as a personal contract hire or personal contract purchase.
A personal contract hire agreement is the most common form of private car leasing. In this process you make monthly payments to a leasing company over a fixed period of time in order to drive a car. The car is never actually yours – effectively you are hiring the vehicle, but over a longer period and therefore at a cheaper rate than a traditional hire car. At the end of the term you simply hand the car back to the leasing company and you can choose to take out another lease. You'll find amazing car lease deals if you opt for a second lease with the same company.
Even if you find incredible car lease deals you need to be careful. For example, there are several restrictions that accompany this form of private car leasing. For example, a leasing company will usually set a mileage restriction which you cannot exceed or else you could be penalized. This is because the leasing company uses this mileage limit to estimate the vehicle’s worth at the end of the contractual period – and therefore this establishes your monthly payments.
Personal contract purchase works in exactly the same way as personal contract hire – but with one twist. This form of private car leasing gives you the option to buy at the end of the lease period. A balloon payment is established between you and the leasing company at the beginning of the contract. An estimate is made on what the car will be worth at the end of the lease period – in other words, its residual value or minimum projected cost.
Once the lease period expires you can choose to make this payment to take ownership of the car. Alternatively, you can return the car to the leasing company.
If you are sold onj the idea of personal car leasing, don't waste any more time and find the best out of all the great car lease deals out there!
Find the best car lease deals out there by taking a bit of your time and spend a couple of hours on Google. You will soon find a respectable company which can guide through the process of private car leasing.
Category:
Autos
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