Many individuals regard car leasing as a privilege of business. Yet private individuals are additionally increasingly turning to automobile leasing as a substitute for buying. Automotive leasing might be more easily related in people’s minds with enterprise because it is seen to involve expensive cars being driven with out sentimental attachment or any need for long-term ownership. It is also often perceived as a convenience that necessitates the kind of money only businesses can afford to splash around. These perceptions nevertheless are rather misleading on a number of levels.
* Firstly, automotive leasing is less expensive than most people realise, since lease payments are mainly based on a vehicle’s depreciation during the lease interval rather than on its total value.
* Secondly, many private drivers at present are much less likely to stick to an older car just for sentimental purposes, and will probably be as ruthless as any businessman or woman in opting to lease a more recent model, should the chance arise.
Thirdly, though automobile leasing typically entails returning the automobile on the end of the lease period, there are several leasing options that let deferred vehicle purchasing. If a business or private individual feels on the outset that it is likely to be beneficial to keep a car after the rent period has ended, a voluntary or compulsory buy contract can be drawn up in advance.
All these reasons make different kinds of automobile leasing equally viable for people and businesses. Private individuals are more than welcome at most large leasing companies where you will discover some great value automobile leasing packages on offer. When discussing the options for vehicle leasing with a client, a reputable leasing firm will advise on measures to help deal with certain risks. One such risk-averting measure is to take out gap insurance.
Gap insurance isn’t the same as commonplace third party or fully comprehensive motor insurance (which the customer must also pay). Gap insurance coverage is optionally available but it covers an essential aspect of car leasing that normal motor insurance coverage can not: the customer’s contracted monetary commitments to the leasing company.
The customer’s agreed monthly payments are based mostly on the anticipated depreciation of the vehicle over the lease period. Should a lease vehicle suffer complete loss by theft, or write-off, normal insurance will compensate the leasing company, through the automotive user’s insurance coverage, for the perceived worth of the car just prior to the loss.
Standard insurance coverage however can’t guarantee that the payments already acquired by the vehicle leasing firm from the client will have covered the automobile’s depreciation thus far. That is notably true early on within the lease period since a car may lose proportionally more of its value at the beginning of its life than towards the end.
Gap insurance is designed to cover any shortfall between the depreciation amount a buyer has already paid and the precise depreciation level at the time of the automobile loss. Without gap insurance coverage the client would be contractually obliged to make up this difference out of his or her own pocket.