An Insight Into The Car Lease

Have you ever found yourself in a dilemma over whether to buy the car or to go for a car lease

? This is one of the most major decisions that the majority of families take nowadays. Most of them vote in favor of acquiring a car on lease due to the fact that in this financial crunch situation, all family members have to struggle to make the both ends meet. Realistically speaking, under such a situation it is next to impossible for average families to save up a huge sum of money to pay for their ideal car. Acquiring a brand new car is on the wish list of every other person. Stealing a glance at the desired compels you to buy it for yourself but focusing on the other expenses and your finances you finally come to a conclusion that a new car is nothing but an unnecessary expense. Car leasing service however has targeted such people and has offered a convenient mode of acquiring a new car to those people who otherwise would have never been able to afford the pleasure and amenities of driving a brand new car. But before you go for a car lease, you might want to know how the lease works.

This is basically a long term rental agreement that the lessor (the one who grants a lease) makes with the lessee (the one who is granted a lease). The monthly payments are the cost for using the car; you are granted an option to buy the car at the end of the term. When you opt for leasing a car from a car dealer, the car is sold to the lease agency by the dealer and they enjoy the commission for providing a customer to the leasing company. Once the car has been leased and all the documents have been signed then you start making the monthly payments. These are calculated by taking into account the amount of depreciation that the car will undergo within the duration that it is in your use. For instance, if you have opted to lease a car that amounts up to $60,000, while the leasing company calculates that after the lease term is over, the car would costs $49000; the monthly payments are calculated by taking into account this decrease in the value of the vehicle. This $11000 difference will be spread over the lease term.

There are some other charges as well that are taken into account while estimating the monthly payments. The biggest charge is the finance one, which is a varying percentage that depends mostly on your credit score. Other associated charges of a car lease cover licensing and tax fees. You may even require to pay in case of crossing the subscribed amount of mileage e.g. going over 60,000 miles or if the car (biler in Danish) gets damaged. Additionally, most leasing agreements require car insurance of the vehicle to be kept.

At the end of the term of lease, the leasing agency gives you an option to either purchase the car or start the lease for the second time.

by: Shane Luise

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