What Is Car Lease?
Car lease is a service provided by auto companies, and represents a mixture of property and rental. The contract sealed between a client and a company is also referred to as a contract hire.
Since many people can not afford to buy a car in cash, this seems a much reasonable economical decision. However, not all is in favor to the client. The contact clearly specifies that until the full payment of the car has been made, the client is not an owner, but nearly a person that pays a monthly amount for the car. If the payment is delay with a month or three in the best case scenario, the company can take the car from the owner and all the money paid so far, represent a rent paid for the car. If the owner pays the full amount, during the contract period, the car is his.
In some countries the car lease contract is very complex, and the person that goes for such services may have a lot of interdictions. For instance, he can be not allowed to drive the car in a country road, forbidden to drive the car out of the state without permission, and most of the contracts forbid the driver who has taken the car in a lease contract, to take it for repairs. All the reparations are made by the Auto-Service company that is a third party to the leasing company, or to the Auto-service that holds a contract with the leasing company. Replacing parts, maintenance and the regular car check-up are done in the same way.
Even so, there are certain benefits, such as the fact that costs for repair are not paid by the owner, if the car is damaged to bad, the owner can get a new one, and have to pay no extra money for this, plus the small amount that he has to pay every month, comparing to a bank loan.
Written by: Matt
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Tagged as auto companies, auto service company, bank loan, best case scenario, car check, car lease, contract period, contracts, cruise control, extra money, fuel economy, lease contract, leasing company, mixture, reparations, third party + Categorized as Business, Economy articles
Hmmm, works nothing like that in the UK by the way.
Contract Hire is simpley a way for people who have a company car and are with a VAT registered company to fund the vehicle, they pay the set rental for 3 years and hand the car back simple.
The rental figure is worked out by the residual value of the vehicle at the end. So if you buy a £20,000 car and at the end of the 3 years its only worth £13,000 you pay for the £7000 spead over the 3 years plus interest.
The car can be driven anywhere in the UK only drawback is of course if there is any damage to the vehicle which would reduce the value of the car this has to be fixed before sending it back or the client gets charged for it.
Work on the vehicle does have to be done by main dealers.
We have a good explaination of how it works on this page.
http://www.lease-hire.co.uk/contract-hire