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Car leases come in several different forms. Often a profitable and popular method of vehicle leasing available to businesses and individuals is contract hire. There is a fixed monthly payment for the vehicle (which may include things like optional maintenance and breakdown cover if desired). Having a fixed amount allows both individuals and businesses to calculate the costs well in advance. Once the contract expires, the vehicle is returned to the cars lease company. There is no option to purchase the vehicle, but there is also no financial risk from having to dispose of the vehicle. The lack of a down payment upfront (up to 1/3 of the cars total worth) makes car leasing a very attractive option. VAT is often able to be reclaimed when the car is used as a business expense. Additionally car tax will be paid for by the leasing company for the duration of the contract saving you money.

Cars can be leased for the business customer by the financing company. This is known as a finance lease. This loan is then repaid to the financing company in fixed monthly instalments. The vehicle will appear on the balance sheet as an asset even though its ownership resides with the finance company. Two payment options are available, firstly it is possible to pay the leasing contract in monthly instalments which are calculated with interest, alternatively you can repay the lease in smaller instalments with a lump sum paid at the end of the lease.

Usage parameters for the vehicle are agreed at the start of the contract, and as long as these parameters don?t change, the interest rates and monthly payments remain fixed throughout the vehicle leasingcontract?s duration. Potential customers should be cautious when paying lower repayments. This is because the balloon payment at the end of the contract may exceed the cars current value. Once the contract has ended, the business can choose to continue using the vehicle under a ?peppercorn agreement?, involving an amount being invoiced annually in advance and needing to be paid annually until the business decides to sell the vehicle. The business does not own the vehicle during this agreement. If the business chooses not to continue using the vehicle, it is sold to a third party and a percentage of the sales proceeds is sent to the financing company with the remainder of the sales proceeds kept by the business.

A contract purchase allows you to buy the vehicle at a set price determined at the end of the contract. The amount paid monthly in a contract lease is estimated off the cars cost, depreciation, mileage and any maintenance or servicing the car may require. Contract purchase allows you the freedom to purchase the car if desired but also gives the freedom of allowing you to return it to the financing company.

In a lease purchase agreement you pay off the value of the car during the leasing contract with no option to return the car. The vehicle?s full value is paid via monthly rentals with a balloon payment at the end of the lease.

To lease cars go to Leasing Options. Leasing Options also provide van leasing.

Source: http://www.articles-now.com/2011/05/what-are-the-different-forms-of-car-leases-on-offer-to-people-when-looking-to-lease-a-vehicle/?utm_source=rss&utm_medium=rss&utm_campaign=what-are-the-different-forms-of-car-leases-on-offer-to-people-when-looking-to-lease-a-vehicle

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