Car leasing: what is it and how does it work for individuals?
Car leasing is a popular financial instrument in the car market, which is a vehicle rental with a buyout right of or a phased acquisition of a car in the property. Indeed, the buyer pays the price of the car divided into parts (as with a loan), but legally the car remains in the property of the company until the payment is completed. Such an organic combination of rent and purchase allows you to become the full owner of the selected car model without the need to pay its cost immediately.
Unlike most European countries, in our country, the car leasing for individuals has become available just recently, but the convenience of the service has already made it very popular among auto fans. Automobile leasing is provided not only by specialized leasing companies and car dealerships, but also by rental companies.
What does an individual need to provide for a car leasing?
If you are already 25 years old, you have at least 5 years of driving experience and are ready to pay a third of the car’s price immediately, it’s not difficult to make a deal. For making a leasing agreement for the selected car, the lessee must provide the lessor with a package of documents consisting of:
- identification code;
- driver’s license;
- additional identity document (foreign passport, for example).
Such a minimum set of documents is a sufficient basis for entering into a leasing agreement.
The procedure for obtaining a car leasing
Getting a vehicle on lease includes a number of stages.
- Choose the car you like that suits you according to all the characteristics, and then provide the company with a package of documents.
- The company checks the documents to make a decision about the possibility / impossibility of concluding a leasing agreement with you containing a detailed list of all the nuances (terms of the transaction, the amount and time-frames of making payments, a list of additional services, the procedure for transferring the vehicle to your property). Such a document can be called a preliminary contract of sale. According to it, you undertake to make fixed payments monthly. The cost of the vehicle and the size of your contributions at the same time are attached to the dollar.
- After the conclusion of the contract, you can immediately use the car, but you have no right to resell it or transfer it to the third parties until the last payment. The company also reserves the right to monitor the technical condition of the vehicle.
- With a contribution of the last payment, the lessee becomes the full owner of the car and can manage it at his own discretion.
Leasing or loan: which is better?
Many believe that leasing does not differ from the usual loan, but this is not quite so. Unlike loaning procedures, leasing operations have significant advantages:
- Lease payments are often substantially less than the loan ones and largely depend on the first installment.
- Payment schedule is more flexible and can have many options.
- The procedure of making the agreement is quite simple and does not take much time (the package of documents is minimal, as well as the decision time for the lessor).
- You can choose between picking up the car at the end of the contract time or returning it to the company by exchanging it for another.
- A leasing agreement provides an opportunity to purchase a commercial vehicle, while it is problematic to make it on a loan to an individual.
- If necessary, a leasing deal is much easier to terminate.
- The agreement may optionally include additional services that save your time (maintenance, seasonal replacement of tires, provision of a replacement vehicle in case of a breakdown).
However, the service has its own small drawbacks compared with the loan.
- Until the company receives the last installment, the car remains in its full ownership, which allows it to be withdrawn in case of unfair payment.
- A car leased by you cannot be sublet to the third parties.
The company 7Cars offers cars both for rent with the right of redemption for individuals and leased for companies. You can choose a car and send us a request on the service page.