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Auto Leasing

As the credit crunch continues, and banks tighten up their standards, business owners and individuals alike are beginning to consider auto leasing as a real financing vehicle. Yes, despite the "presumed health" of banks across North America, their balance sheets continue to sag from the billions of dollars worth of bad debt during the housing bubble. As a result, bank credit has become harder and harder to come by, meaning that leasing companies have had to pick up the slack for vehicle financing.

Long Term Business And Personal Use

Lots of businesses are now looking into auto leasing because it cuts down their costs - saving them thousands of dollars on what it'd cost to buy fleets of cars outright. For a fixed monthly or annual fee they can use a leased car until the expiry of the contract - when they must give back the car to the leasing company, who usually lease it out to someone else, or sell the car.

Vehicle leasing as a concept works for a lot of people as it doesn't really require the same kind of collateral and credit standards as a bank loan does. Plus, the vehicle leasing company effective buys and owns the car, meaning there is less personal risk in cases of accident. This arrangement works for both parties.

It may seem a mystery as to how auto leasing companies can turn over any kind of profit, but the answer lies in the behavior of consumers. Some businesses or individuals will always insist on having the latest car, and they'll pay a premium to get it. Buying a new car every 6 months isn't viable for these people, but they still want the latest model - so they lease it. They'll get a new lease every time they get a new car - and their old car will be leased again, and again or sold. In this way, auto leasing companies can find profit in the changing tastes of their customers.

Agreement Structure

Lease agreements will typically stipulate how many miles the user is allowed to drive every year, and there may be a penalty for going over this figure. However mileage limits can usually be negotiated with leasing firms, to ensure your agreement suits your every need. Some more specialized leasing agreements which are popular in the US include all servicing and repairs - leaving the user to pay only the gas costs and insurance. These are pricier arrangements, of course, but are far superior to bank loans as they provide a premium level of service, whereas bank loans simply provide one-off financing.

Whether you're tired of your old vehicle, or just thinking about getting a new car - but without paying tens of thousands of dollars, auto leasing is a great way to get a car at a very reasonable price.

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