WHEN it comes to the discussion of leasing vs. buying a car, many businesses turn to the latter. This doesn’t mean that leasing is without problems though. Many customers don’t take the time to properly understand the exact terms of their lease, and this results in problems down the line. A well respected leasing company called LeaseCar also will give you a good idea of this.
The Risks of Excess Mileage
One of the largest determiners in your monthly fee will be the mileage limit you agree to. Many leasing companies set a maximum of between 12,000-15,000 miles per year so it’s crucial that you understand how far you travel on an annual basis. According to figures from 2013, the average person in the UK drives around 7,900 miles per year. If you are expecting any significant growth in your business over the length of your contract, it may be wise to adjust your current average mileage to reflect this. This will give you some leeway if your situation changes and help to reduce the chance of receiving any excess mileage charges.
What Constitutes Fair Wear?
The fair wear agreement is a clause in your contract that details the amount of damage that can be tolerated when you return your vehicle. If you take out a longer contract, less damage will be expected than if you’ve taken out a contract over several years. While small scratches, light fading to the inner upholstery, and other signs of general wear are expected, any instances that could cause the lender to replace parts or repaint the vehicle will result in a fine. There is a standard guideline set out by the BVRLA for companies to follow in these cases.
Ending Your Contract Early
If you are no longer able to afford the monthly rate you originally agreed to, terminating your contract with the lender may help free up cash flow that could save our business. At this point you will have three main options: either paying the termination fee (which could include all future payments as well as penalties for the cancellation), trading the vehicle in for a cheaper option (this will likely also incur penalties), or finding someone to take over your leasing agreement for you (where you will likely pay a transfer fee). As all of these options are costly, it’s highly recommended that don’t agree to a contract which you aren’t 100% confident you can fulfill.
While leasing often makes the most sense for businesses, it’s still crucial that you understand all of the terms of your contract. Don’t be pressured to agree to anything you don’t quite understand.
