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Is It Profitable to Go for Car Leasing?

Is It Profitable to Go for Car Leasing

The purchase of a car is one of the most expensive investments that not everyone can afford to pay for upfront. People resort to using loans, but are there any other alternatives? Fortunately, there are. And one of them is car leasing.

Car leasing is a financial operation that allows for long-term car rental with the option of purchasing it later. In simpler terms, it is like renting a car, but for a longer period of time, usually ranging from 1 year to 5 years. The condition for obtaining the car for personal use is making a monthly payment for the agreed-upon term. The payment amount is usually lower compared to a car loan. But is everything as positive as it seems, and what hurdles will you have to overcome on the path to obtaining your own vehicle? Let us find out. 

Car leasing process

Since leasing is arranged for a longer term, the process of preparing to obtain a car is more serious and thorough. However, it does not involve unnecessary paperwork — only the most necessary procedures. So, to arrange a car lease, you will need to go through several key stages.

  1. Finding a car is the first and most important step that determines what your experience of using the vehicle will be like. There are two options for finding a car: doing it independently or with the help of a leasing company. The first option is more flexible, as you can rely solely on your own preferences, but at the same time, it is more time-consuming. The second option is a service that optimises and speeds up the search processes. Based on the client’s specific data and budget, several cars are selected from which the client can choose.

  2. Contacting the leasing company. You can approach a service specialising in car leasing either immediately or as a result of personal search. However, it is impossible to bypass this stage since it is with the company that the contract will be concluded. Consultations with specialists can be very useful for obtaining information about available leasing options and discussing any questions that may arise.

  3. Document submission. The decision to lease a car undoubtedly involves document processing. For this, you will need a driver’s licence, passport, income statement, and some other documents that may vary from company to company. Provide all the necessary copies and await the completion of the verification process.

  4. Contract signing is the final stage of the leasing process but no less responsible. Before signing the contract itself, carefully review the terms of acceptance and return of the car, as well as pay attention to what will be required for redemption. Make sure you fully understand your obligations and rights within the lease agreement.

In the end, the car becomes yours. Be attentive on the road!

Types of car leasing

Most likely, when visiting leasing platform websites, you may have come across certain terms related to different types of car leasing. In fact, there are only two types: operational leasing and financial leasing. Let us take  a look at their differences and characteristic features further.

  • Operational leasing is a car rental without transferring ownership rights. The period of usage typically ranges from 1 year to 3 years. Since the lessee does not purchase the vehicle after the lease term, the payment amount only covers the use of the vehicle without the need to pay the full cost of the car during the leasing process. An unquestionable advantage is the possibility of technical maintenance and insurance, although these parameters remain under the consideration of the leasing company. This option is most preferable for those who expect temporary use of the vehicle and want to reduce commission costs.

  • Financial leasing, also known as lease with a purchase option, is a form of leasing that allows becoming the owner of the vehicle after the lease term. During the usage of the vehicle, the client makes payments that either cover the full initial cost of the car or a part of it, with the obligation to pay the remaining amount after the lease term ends. As a result, the vehicle can be returned to the leasing company or, if desired by the lessee, purchased by them. Such conditions can be particularly beneficial for those who plan to purchase their own car but do not have the full amount available.

Thus, the choice between one type of leasing and another depends on your preferences, plans, and budget. It is impossible to declare one of them more advantageous – both types of leasing are designed for completely different situations. Operational leasing can be considered more economical and secure, while financial leasing requires more responsibility and financial contributions with the prospect of purchase. 

What are the benefits of car leasing?

Having understood the basic concepts of leasing, let us proceed to clarify the main aspect of our article – the benefits that the client obtains as a result of arranging auto leasing. Of course, the evaluation is subjective since the terms of obtaining a vehicle depend on the specific leasing company. Nevertheless, you can definitely expect the following advantages:

  • Leasing arrangement through a simplified procedure. Formalities have been minimised as the leasing company takes on the majority of tasks related to insurance, contract preparation, and other matters. The most important thing for the client is to choose a car and carefully review the terms.

  • The possibility to select an optimal leasing term: from 12 to 60 months. Flexibility in the rental period allows for adapting the leasing program to one’s financial capabilities and plans for car usage. On the other hand, the car can be purchased and become its owner — it all depends on the lessee’s preferences.

  • No significant financial burden on the budget. Buying a car or obtaining a loan entails much greater expenses compared to leasing. Furthermore, instead of a one-time payment of a large sum, the client benefits from dividing the amount into monthly instalments, resulting in a more even distribution of funds.

  • Support and service. Often, leasing companies offer technical support for the car as one of the cooperation conditions. It is convenient when you do not have to take care of repairs or insurance arrangements yourself — specialists handle these tasks for you. 

How to properly lease a car

We have already familiarised ourselves with the process of leasing a car, but it is worth emphasising that each stage has its own nuances. To avoid common mistakes, it is important to approach this matter meticulously, and our compilation of recommendations will help you with that.

  • When choosing a car, focus on the details. The brand, model, and specifications of the vehicle are all important for the quality of your future trips. Consider your budget and select the newest and most well-known options available. Also, do not disregard the condition of the car and its history. This information can be useful in assessing the frequency of breakdowns.

  • Approach the document preparation responsibly. The faster you can gather all the necessary paperwork, the smoother the registration process will be, resulting in receiving the keys to the car. However, do not be overly confident. If there are errors in the documents, the process will be delayed. Create a list of important documents and verify their correctness.

  • Ensure that the terms of the contract are transparent. Take your time when reading through the contract clauses, as it will be in effect for the entire duration. Read absolutely everything, including the fine print. If you have any questions, reach out to the company representatives and clarify anything you need. Sign the contract with full confidence.

  • Adhere to the leasing conditions. Keep track of the leasing payment schedule, service the car according to the company’s recommendations, and abide by other terms specified in the contract. This approach will help you avoid penalties and increase the likelihood of future leasing if you are interested in it.

Car leasing software

Car leasing software is a modern tool for managing business operations related to auto leasing. Among the main tasks of leasing software are tracking vehicle fleets, managing customer information, and generating reports. The process of monitoring all business processes is consolidated into a single platform, which allows for time optimization, increased profitability, and easier and faster control over the vehicles.

One of the best solutions for automotive leasing software is the CRM system called RentSyst. The features of this platform are as follows:

  • Universal work with all types of car rental businesses;
  • Cloud software format;
  • Skillful task planning;
  • Telematics VOS system ensures full control over vehicles;
  • Reporting and document management takes place in one place;
  • Remote control of key car functions: opening and closing door locks, engine operation, speed limit exceeded, fuel level, and more;
  • Automatic reminders of the need for car repairs.

Using leasing software, such as RentSyst, will help you reduce expenses in management processes, increase the efficiency of your car fleet operations, and achieve heights in your business.

Conclusion

In answering the main question of the article, it is important to take into account all the analysed aspects of vehicle leasing. Considering the lower price, flexible terms, the presence of technical maintenance under the contract, and the absence of collateral, it is worth acknowledging that the profitability of leasing is evident. Moreover, its various forms can adapt to the client’s requirements and situation, providing suitable conditions for long-term rentals. A comprehensive overview speaks of only one thing: leasing is a beneficial alternative that allows both saving and eliminating many additional concerns regarding car maintenance.

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