Leasing a car has a similar meaning to renting on a longer term, the customer doesn’t own a car, a financial company purchases the car for a customer. A customer then leases it back from teh finance company by paying a lease for a fixed period of time. At the end of the lease agreement a final payment can be paid so the customer becomes the owner of the car. Another option is to refinance the residual value of the car and extend the lease.
Car leases are recommended when purchasing vehicles that will be used for income producing purposes, such as for companies and self-employed individuals.
Benefits of leasing a car
- Flexible terms from 1 to 5 years
- Fixed rates so you know exactly how much your repayments will be
- Costs are known which makes for easier planning
- The payments are tax deductible when used for business purposes
- Lower upfront lump sum payment