Car Leasing
Monday, March 3, 2008
Leasing cars means that you are going to pay the amount the cars depreciate during the time you are in control of them. When you are leasing cars, you do not own them, and when you turn them back in, you will have, in theory, paid for the value that you used. The difference between the value of the vehicles when they were new and the value at the end of the car-leasing contract is called depreciation, and depreciation determines how much leasing cars will cost you.
What is unique about leasing cars is that different cars have different rates of depreciation, which means they are have different leasing costs. American cars, for instance, tend to have a higher rate of depreciation than cars of European and Japanese makes. This means that if you are going to lease a car, you might want to look for a foreign-made model if you want to save some money.
If you are considering leasing cars, whether it is for your business or for your personal use, you will generally be able to drive a much newer car for a much lower monthly cost. This is a great option if owning the vehicle at the end of the process is not important for you. Leasing cars is a great option as well for those people who want to have newer, more reliable vehicles at all times. When the lease is up, you simply turn the car back in and shop around for a new car to lease! That is the beauty of car leasing!
Advantages of Leasing Cars
Leasing cars for my business offered me the tax advantage of not paying the hundreds of dollars in taxes a purchase would require. What's more, I can deduct a portion of the lease installments as a business expense. Plus, The monthly payments are 30-50% less than a loan for the same fleet.
Most lease agreements coincide with the manufacturer warranty so I don't have to worry about costly mechanical repairs because nearly everything is covered. Another advantage of leasing cards is that I can return a vehicle after using it for a few years and pick up a newer model. I won't lose equity in the vehicle and I'll never owe more than it's worth thanks to the included gap insurance.
Disadvantages of Leasing Cars
The main disadvantage of leasing cars for my business is the mileage limit. If I exceed the allowed mileage during my lease period I'll be penalized up to $.39 per mile. I will also be charged for any damage or changes made to the leased vehicles.
Businesses may want to consider leasing, rather than buying equipment. Leasing affords you access to many types of equipment and reduces the amount of cash you'll need to raise for your business. :)