Operating Lease
What is an operating lease?
For those that use their car for business purposes the majority of the time, an operating lease may be the best leasing option. In an operating lease, the person leasing the vehicle makes their monthly lease payments, and, at the end of their lease terms, releases the vehicle back to the leasing company.
Operating leases are also a good choice for companies that lease commercial vehicles, such as cargo vans or light duty trucks. Whether you are considering an operating lease as an individual or a company, it makes sense to learn how an operating lease works before making a commitment.
The benefit of an operating lease is that, at the end of the lease, there are no surprise fees or decisions to make regarding whether to purchase a vehicle. You simply return the lease vehicle to the leasing company, with no end of term penalties.
Operating lease terms are flexible, and take into account the expected amount of use the vehicle will receive and the length of time you want to keep the vehicle. If the terms that are offered to you do not seem right, negotiate with the leaser. The experienced leaser will effectively estimate the amount you will use the vehicle and the wear the vehicle will receive to come up with a lease figure. If it seems too high, make sure that they understand what type of use the vehicle will receive or how much driving you plan to do. When there is a discrepancy between what the leaser and the one entering into the lease expect, it is often due to one or the other misunderstanding the amount of use the vehicle will receive. This has a direct effect on the value of the vehicle at the end of the lease.
Once you come to terms on the monthly figure, taking on an operating lease should not strain your budget, as there is no need for a down payment or other initial outlay of funds. When you make a deal with your lease financier, the payment will be a fixed amount each month. At the end of the lease term, you simply return the vehicle to the leasing company, at no cost.
Is an operating lease right for you?
For the company that keeps a tight eye on expenses, an operating lease can be a very good choice. The lease of a commercial vehicle does not count as an asset, and in most cases, expenses associated with leased commercial vehicles are tax deductible.
For the company without many liquid assets, operating leases allow the company to expand their fleet economically. Because there is no required capital due at the lease signing, the growing company can invest their money in their own business. When the lease ends, there is no penalty for the distance that you drive or the amount of use on the vehicle, and no requirement to buy the vehicle or trade it for another. You can simply turn the vehicle back over to the leasing company.
What to look for in a leasing company
If you are interested in entering into an operating lease, it is important to choose a company with experience in the field. Leasing light duty commercial vehicles is very different than leasing vehicles for private use. The experienced leasing company will help you accurately estimate how many kilometres you expect to drive annually. They will also help you determine which vehicle and leasing option best meets your needs. When taking on an operating lease, it is very helpful to work with a leasing company that has experiencing leasing vehicles in your industry.
Other Finance Options
Platinum Car Loans offers you all the right car financing options, these include Novated Lease or Novated Leasing, Commercial Hire Purchase, Chattel Mortgage, Car Lease, Finance Lease, Operating Lease and all Consumer Secured Car Loans.
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