If the old car has served its time, you need a bigger car or you want to buy your first vehicle, you often need additional financing to realize your dream, because your savings are not enough. Leasing is most often used to buy a car. There are two types of leasing – financial and operational leasing, which will be the most suitable and in which situations, explains Raivo Bāle, head of leasing at Luminor.
“The process of receiving a lease is very simple and does not take much time, but before receiving a loan, you must evaluate your financial capabilities and obligations, as well as choose the most suitable type of leasing according to your wishes and needs,” indicates Raivo BaleHead of Luminor Leasing.
Financial or operational leasing?
There are two types of leasing for the purchase of a car: financial and operational leasing. The main difference is whether you want to become the full owner of the purchased vehicle. When choosing financial leasing, payments for the car are made in installments, gradually covering the value of the vehicle. After that, the car becomes the customer’s property.
Operational leasing is more suitable for customers who do not want to become the owner of a car, so it is very often used by companies. Both financial and operational leasing are available for both used and new cars, however, operational leasing is more often used to get a new vehicle into use.
Operational leasing has lower monthly payments because the entire value of the car does not have to be covered during the contract. At the end of the obligations, the car goes back to the buyers – car dealers, from which the car was originally purchased. At the same time, operational leasing is more flexible than financial leasing. For example, if you still decide to buy a car after the end of the contract, you must inform the lessor of your desire, who will examine the options and inform you if and how it would be possible.
Evaluation of financial opportunities
The first step is an assessment of needs and financial possibilities. It is important to remember that additional leasing payments, vehicles will also have other related costs, for example, the car will have to be insured and annual operating tax repayments must be made. Their amount depends on the car’s year of manufacture, make and model, engine capacity. You must also take into account the recent increase in the Euribor rate, which can increase the monthly payments.
We should also not forget about car maintenance, which directly depends on the car model, for example, different vehicles have to do it more often – every 15,000 kilometers driven.
Regarding car leasing, it is recommended to consult a leasing specialist, as it will be easier to choose both the car model and the most suitable type of leasing.
No need to go to the bank
The leasing process is not complicated – if the dealer has concluded a cooperation agreement with the leasing company, then the client can also conclude a leasing agreement for the purchase of a new car at a car showroom. It should be taken into account that for the purchase of a used car, a vehicle appraisal will be required for leasing, which can be provided by appraisers accepted by the leasing company. For the purchase of both new and used cars, you will also need to fill out a leasing application and present a valid identity document – passport or ID card. If the car is purchased by a legal entity, it will be necessary to attach the previous year’s financial statement for both used and new cars for leasing.
As R. Bāle points out, the leasing review process is very fast – often the answer is received already on the same day. If a more expensive car is chosen or the customer has other credit obligations, the review period may be a little longer.
Luminor
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