subject: What Are The Risks And Conditions Of Private Leasing [print this page] Due to the popularity of low interest loans, a lot of people seem to forget the option for private leasing. However, private leasing could be a very helpful tool if you want a nice new car at the lowest price available. Of course, there are some repercussions. Lack of knowledge about private leasing could be very detrimental for your finances and your credit rating as well. If you do not take into account these important aspects, you will end up with more than what you have hoped for. It is necessary to always be in the know about the risks and conditions related to private leasing and how you can make them work to your advantage.
First, understand the difference between the open ends versus the closed end leases. In closed end private leasing, the residual is predetermined. You will pay all the excess or costs beyond what has been included in the lease contract due to extra mileage as well as excessive damages. The open end private leasing on the other hand assesses the residual value of the car when it is delivered to the dealer after the term. If the amount is less than the original estimate for the residual, then you pay the remaining costs. If the value is more than the residual, then they will pay you the difference. Of course, other expenses like mileage and damage are still considered in the overall equation. For the biggest part, the open end private leasing will cost less but you will have to be wary of the costs that you have to incur at the end of the lease.
Before making any deals, you have to read the lease contract. It is possible that the dealers can offer a blank agreement or a template of the agreement since the mechanism behind getting a lease is the same for all applicants, with the change in prices and the extent of the contract. Some dealers will not give you one. Just try your luck. The worst thing that could happen is not receive any samples. Each company will have their own unique contract and that means they will also have some variations in prices and other important details. Always check the fine print. Like any other contract, the fine print tends to be the juiciest and trickiest part of the contract so do not forget to check it. Some contracts will have additional requirements while others will not require that. If you are not aware of the jargon and technical details, ask a third party analyst like your accountant or legal representative.
For private leasing, you have to anticipate the fees that you will get. For most deals, there will be additional costs like down payments and cap reductions. Most of them will also not include the interest or the money factor. You have to know these costs since you want to be able to check if in the long run, you will be able to commit to the contract. If you do not complete the contract, expensive fees will be on your way and that is not an ideal situation especially if your intention in the first place was to choose the most practical cost for your investments.
