Leasing as a financial instrument is actively used by legal entities and individual entrepreneurs. But the purchase of cars on lease is also available for individuals – such offers from partners are available on the website of any dealer.
The auto business figured out how leasing differs from traditional lending, what pros and cons it has for consumers, and how much it is in demand today.
Differences between leasing and credit
The fundamental difference between leasing and credit is that when buying on credit, you ask the bank for a loan of money, and when buying on lease, you rent property with subsequent redemption. That is, with leasing, the owner of the property until the moment of redemption is the leasing company, with a loan, the owner is the client himself, but the property is pledged to the bank. Plus, depending on the object of lending and the amount, the bank may impose additional requirements for securing obligations, life insurance, etc.
Leasing is distinguished by its availability – I would call it more affordable than lending. Each leasing company has its own approach to the number of documents provided by the client, but today all companies check the income of the lessee and their sources. If the income level is insufficient, options for the total family income, as well as a guarantee, can be considered.
There are situations when a client has questions about confirming sources of income (self-employed, artisans, etc.). In this case, he still needs to tell what he does, and if the maximum down payment on the transaction is made – according to the law, this is up to 40 percent of the value of the leased asset – the issue can be resolved positively.
In case of non-payment of payments, the leasing company has the right to reclaim the object of leasing without returning the deposited funds – customers must understand this. Naturally, this is prescribed in the contracts. All payments made are payment for the use of the property.
But the lessor does not set himself the goal of taking the car from the client at the first opportunity, the task is to bring the deal to its logical conclusion. It is necessary to take a responsible approach to the choice of a financial partner and find out what the leasing company can offer in some difficult situation. Life shows that anything can happen, so there are options for restructuring payments.
The right of the lessor is to impose penalties in case of delay in payments, but this is precisely the right, not the obligation, therefore, if the delay is not critical, many companies do not use this right. But how well and in a timely manner the client fulfills its obligations to pay lease payments is reflected in the credit history.
A number of companies, including the leasing company GRAND PRIX MOTORS, offer special leasing conditions that allow you to get a car with minimal overpayments. This is possible due to the fact that the leasing company purchases a large number of cars and has certain preferences, which it uses to finance those brands with which there are agreements under special programs. That is, relatively speaking, you can just come and buy a car for the full price, or you can lease it for a certain period, and the total payments will be approximately equal to the full cost, but the payments will stretch over time for a period depending on specific promotional offers.
Unlike lending, leasing can be nominated in different currencies: in US dollars, euros . For those who have a stable income pegged to the US dollar or euro, it is beneficial to use leasing in these currencies, since the overpayment will be minimal – from about 4.5 percent per year.
The possibility of buying a used car is another advantage of leasing for customers. Some companies are even ready to finance the purchase of cheap and old cars for which no bank will give a loan, and some even offer their trade-in when the client’s old car is accepted as a down payment.
For many clients, it is convenient to pay for insurance by a leasing company with its cost included in the lease payment schedule. But at the same time, no one forbids the client to pay for insurance on their own – it all depends on the agreements, but in any case, the leasing company will be the beneficiary of the insurance. A number of companies have a service for the settlement of insured events – in this situation, the client only needs to provide a package of documents, and the lessor himself resolves issues with the insurance.
As a negative aspect of leasing for individuals, one can only note the impossibility of buying out a car earlier than in a year, but this restriction is provided for by law. In addition, the leasing company has the right to check the condition of the object. Some lessors use this right, which creates discomfort for customers, some do not, especially if payments are on schedule.
Our verdict
Leasing scares off largely due to the fact that, until the moment of redemption, you actually have to use someone else’s car. But if you forget about this nuance, then leasing is a convenient financial instrument for individuals, although, of course, legal entities primarily use it. Leasing often turns out to be the only way to buy a new car without paying the full price, because banks simply refuse loans to many categories of buyers. In addition, with the help of leasing, you can also buy a used car.
