find out how it works and if it’s worth it

“Should I buy a car in cash, in installments, in leasing or car rental?”. The question may vary in small nuances, but this is generally the question that remains and creates anxiety for those who want to buy a new car.

Although buying cars in cash, or in installments, are the most common options, leasing is gaining more and more popularity.

However, there is an option that is very similar to leasing, with less responsibilities: car leasing. This, contrary to what you think, is not necessarily an option exclusively for companies.

Discover more about this modality.

What is car leasing

Car leasing is a type of financing with characteristics similar to Long Term Rental (ALD). However, unlike this, there is no commitment to purchase the vehicle at the end of the contract.

Also known as Operational Vehicle Leasing (AOV), this vehicle financing solution is defined as a vehicle leasing contract, with the provision of associated services, for a predetermined period and mileage, upon payment of a rent.

In other words, it is a kind of loan, without major obligations and with assistance, limited to a certain number of years and kilometers.

Normally, the customer only bears the monthly costs of the loan, with a strong possibility of having to pay a down payment, for insurance and administrative reasons. For the rest, you will only have to bear the wear and tear of the vehicle, namely basic maintenance, such as changing the car’s oils and water, interior cleaning, fuel, etc.

Car leasing also includes all the services necessary for the normal operation and conservation of the car.

Flexible solutions

Normally, most rentings are flexible solutions, allowing changes to the term, mileage and services, initially contracted, and the rent is adjusted to the changes.

The value of rentings depends on the brand, model, color and even extras that may be included. However, it is safe to say that for amounts around 200 euros you may be able to acquire a “loan” of a car.

Although most car leases are for new cars, there are also solutions for used cars. At the end of the contract, you will only have to return the vehicle and your responsibility towards it will be over.

Only if the vehicle is damaged may you have to pay some extra amount of compensation, but only if the repair value exceeds the insurance already included at the time of signing the contract. However, you can also renew or change the contract and even buy it.

Who is car leasing aimed at?

Car leasing was initially created for companies or similar entities, individual entrepreneurs and public administration. However, you can also obtain leasing options for individuals.

At its base, it is recommended for people who do not want to assume financial responsibilities with the car, such as expenses with car maintenance, insurance, IUC, among other things.

As it is a solution without major commitments, many companies opt for renting in order to ensure that their employees have a vehicle “at hand” to drive in circumstances of need caused by work.

Support services available in car leasing

Contracts vary not only from company to company, but also depending on the agreement itself and even the make and model. However, among the most common support services you can count on are the following:

• Preventive and corrective maintenance one or more times a year and also in case of breakdown or accident;
• Insurance paid by the company;
• Tire change when necessary free of charge;
• Replacement vehicle when necessary;
• travel assistance;
• Payment of the IUC by the company;
• 24 hour helpline
• Management of claims by the company (all the bureaucratic part);
• Payment of mandatory periodic inspections;
• Fuel card and/or payment of part of it, as well as adblue liquid (if practicable), with values ​​to be agreed between the parties;
• Toll card.

How to compare prices and conditions

Although most brands have car leasing and/or renting financing solutions, they tend to be aimed more at companies, equivalent entities, public administration and individual entrepreneurs.

However, there are many other entities that tend to have many car rental options available to individuals.

To find out which option is best for you, you must first define the model/s you want, trace the number of kilometers and then search the websites of each one to find out what support services each one provides.

Car leasing contracts usually have a minimum duration of one year and a maximum of 48 months, as well as a maximum limit of kilometers per year and/or during the contract.

What happens if I want to cancel the contract early?

It is indeed possible to cancel the contract early without fulfilling it in full.

However, most contracts have clauses that determine that, if you do not fulfill the contract until the end, you must not only return the vehicle, but also pay a percentage of around 50% of the remaining monthly payments.

Usually the first year has to be paid in full.

What if I do more kilometers than contracted?

If you exceed the number of kilometers contracted, you will normally have to pay an associated amount, defined at the time of signing the contract, for each additional kilometer.

However, most car rental contracts are adjustable and therefore it is possible to change the conditions.

Conclusion

Car leasing is a form of financing that turns out to be a car loan. Thus, during the loan period the car is not yours. Therefore, it does not usually entail responsibilities for maintenance, claims and consequently insurance, IUC or the payment of inspections. You must, however, bring it in for inspection as normal.

In addition, at the end of the contract, the car ends up having no responsibility for it, however, in most cases, you can buy it.

The biggest advantage is the least responsibility. The biggest disadvantage is being limited to a certain number kilometers and also not earning any kind of return at the end of the contract.