Consider these before beginning a business car leasing.

 

Business vehicle leasing has been catching on quickly all over the world and likewise, car lease in India is getting a warm welcome from the public. Its growing popularity is mainly due to its numerous benefits and being the most convenient mobility solution available. But one must not blindly go into car leasing, you should keep in mind some things before you set out to lease a car or a fleet of cars. You should be aware of the things which can help you optimize your lease so that you can make the most out of it.

 

Given below are a few important factors you should be focusing on, which will help you pick the right lease that suits your needs and business.

 

Understand what you need.

For a good beginning of a good business vehicle leasing, you need a concrete understanding of your mobility needs. For instance, you might have staff who travel shorter distances, but often, like field staff, some employees use vehicles for just their commute to work. The idea is to understand what type of car and car lease works best for them; the car you give your field employees might not always work for the employees who commute to work. If you are looking at other countries to select apt car models it may vary in our country because Indian roads and traffic are unique. So you should understand car lease in India and your needs well.

Once you get a proper understanding of the needs of the company, you will be able to explore several lease options such as ALD Pro - Car lease plan designed for field staff and the ALD Ugo - Car lease plan designed for corporate employees. You can examine these to decide which mileage and tenure combinations of the car models will suit your need the best.

 

What type of lease works best for you?

When we look at business vehicle leasing, there are actually two types of leases - Operating Lease and Finance Lease. Before you jump into choosing you must have a proper understanding of what each lease brings to the table.

An Operating Lease is essentially an agreement where you pay a monthly rental to the leasing partner for the right to use the car you selected. Such a lease provides various add-on benefits that can be included in the monthly payment and that can be used for your advantages to the maximum. This lease does not have the risk of resale because you can simply return the car once the lease period is over and you can even choose to buy the car if you are looking to use it for a longer period. The major benefit of the lease is the option to upgrade after the lease period, you can use newer cars with newer tech without having to spend an immense amount of money.

However, a Finance Lease is very similar to getting a loan from a financial institution. It gives you cumulative financing on the ex-showroom price which enables you to drive the car. The downside is that it carries with it a heavy down payment and the hassles of maintenance, insurance etc. are unresolved and they will fall on you. The benefits present in Operating Lease will not be available here and you will most likely have to spend a lot from your pocket.

 

What is the lease going to cost you?

Once you figure out exactly what you are expecting from a lease, it is then the time to calculate how much it is going to cost you. There are a number of factors present in any car lease when it comes to cost, let us take a look.

 

List Price

This is one of the main factors that decide how much you have to pay as a monthly rental. Not many leasing partners will try to hide it, nonetheless, you should be aware of it. So, when you sit down to choose the perfect car for you, look at the ex-showroom price of the car- which is the price of the vehicle determined by the manufacturer.

 

​Residual Value

Like most things in the world, the value of a car also depreciates over time. You only pay for the time you are using the car when you are leasing, hence the amount you only pay for depreciation during your lease term.

By residual value what they mean is the analysis of what the car will be worth at the time when the lease ends. If the residual value of the car is higher, it will result in lower lease rental costs. To understand better let us look at an example:

Let us say you are leasing a car which currently costs ₹10 lakhs and that you are leasing the car for 4 years. When we calculate the residual value of the ₹10 lakhs worth car in 4 years (the lease period), the price is now ₹4.5 lakhs (this amount is the residual value). So your lease rentals will only be based on the remaining amount after the residual value is subtracted from the price of the car (which is ₹5.5 lakhs in this case)

Car leasing is the new normal and it has already established itself as the best mobility solution available today. These are a few things you should consider before jumping into car leasing. We know it is a beneficial mobility solution but considering these factors will help you get the maximum out of a lease plan. So, have the best car leasing experience without mistakes.