Car Leasing: What is it all about?

August 26,2019

Car Leasing: What is it all about?

 

Car leasing is a form of financing over a during of 2 years or more. It is different from car renting in the sense that you can rent a car for a small period of time, such as a day or a week, for a price that includes insurance coverage and all vehicle associated maintenance fees and taxes covered by the supplier.

 

Car leasing facts:

  • Lease term is usually no less than 24 months

  • Insurance fees covered by the driver (otherwise factored into the lease rental)

  • Service, maintenance, registration and taxes paid by the driver (otherwise factored into the lease rental)

  • Limited mileage use, which if exceeded, would result in the payment of compensation by the driver

  • Security deposit

  • No down payment

 

 

 

 

 

With car leasing, it is as if you were the owner of the car, though the car would actually be owned by a leasing company. The legal terms and conditions are all outlined in a formal lease contract that specifies the monthly lease payments which are supposed to be paid at the beginning of each month. This means that you are supposed to pay the first lease rental upon taking delivery of the car. The monthly payment is based on the agreed price of the car, and in some lease contracts, you could have a ‘purchase option’ at the end of the lease term that allows you to buy the car for a specific amount of money. 

 

Lease contracts also set out a limited mileage for using the car, which if surpassed, you would be obliged to pay compensation to the leasing company. Most contracts also require an up-front security deposit you must pay, which you would get back at the end of the lease term. The security deposit is kind of a guarantee for the leasing company and can be used in case you fail to pay any monthly lease payments or maintenance costs. The purpose is to ensure the car is maintained and returned in good condition as agreed in the lease contract. 

 

Leasing provides people with the opportunity to drive the cars they like, which they cannot afford to buy.  The leasing of vehicles became popular in the 1980s when people were seeking affordable ways to drive the new cars they liked. Leasing is a well-known form of financing for vehicles, construction equipment, real estate, aircraft, and ships.

 

Car leasing can be quite lucrative for leasing companies and car owners, because they may offer good returns on investment.

 

Karrenn has asked for feedback from the Lebanese car community on the topic. Many people don’t know what car leasing actually involves and have asked to learn more, while others have indicated that leasing rates offered in Lebanon are high and are thus not economically or financially beneficial for the driver.  

 

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