The Different Forms Of Car Lease Offered To Businesses | Florida ...

There are a few different types of car leasing offered to business. The first thing to do is understand the car lease. The largest part of the lease cars is depreciation. This is the basic premise for the lease. Monthly payments are determined by the depreciation. The amount the value of the car decreases during the lease period is the depreciation.

Depreciation involves some interesting facts. The payments will be much more expensive if the car depreciates rapidly. This is usually great for the business that is the lessor. A car that does not depreciate quickly will have less expensive payments. This is good for the business that is the lessee. When the economy fluctuates, the depreciation of the vehicle will too. Other depreciation variables are the make, model, and year. The depreciation of a vehicle is more rapid in the beginning of its life. After that, it is usually steadier. Open-end leases are used primarily for businesses. An open-end lease means the business must pay another charge if the vehicle has depreciated more than expected. A closed-end lease means at lease end the customer can simply walk away. It does not matter if the vehicle has depreciated more or less than anticipated. This type of lease is not generally offered to businesses. It is an important consideration if a leasing company offers businesses a closed-end lease.

One type of lease offered to businesses is a business contract hire. This is a very common type of car leasing. This type of contract lasts 12 to 60 months. The contract details are designed to fit business needs. Contract hire leases are available with or without a maintenance agreement. This type of contract has a few different advantages. It is not on the balance sheet. It has fixed interest rates. The depreciation risk is nonexistent. This is the responsibility of the leasing company.

A lease purchase is another type of lease. A lease purchase has some advantages and disadvantages. This type of car leasing has a smaller deposit. It also generally has lower monthly payments. The company can invest the money into the business instead. This type of contract has a disadvantage at the end. A large balloon payment is due at the end of the contract. It is important to make sure the business will have this money available at that time. The anticipated future value of the car is the payment due at lease end. The lessee will then be the owner of the vehicle. Businesses may reclaim the VAT, if the vehicle was used for business purposes only.

An additional type of lease available is a finance lease. A finance lease is a tax efficient choice for businesses. The vehicle remains the property of the company that is the lessor. This type of lease does appear on the balance sheet. Generally, monthly payments and interest rates are fixed. The most important aspect of car and leasing choices is complete comprehension of the available options. Use this information to determine which is best for the business. A second important factor is to completely understand the lease before signing it. Otherwise, the business can get into financial trouble. The purpose for leasing vehicles is to help the business grow.

Source: http://www.mortgagehelplineblog.com/2011/09/the-different-forms-of-car-lease-offered-to-businesses/

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