5 things you should know as a decision maker before leasing a company car

5 Things You Should Know As A Decision Maker Before Leasing A Company Car

For many businesses growing in need of a new vehicle, leasing a car often proves to be the smartest, safest, and most sensible option. With a lease in place, those businesses are empowered to get on the road and meet the needs of their customers in a quality vehicle that reflects the high standards upon which they’re building their reputation, all without the kind of initial capital investment and long-term complications that come with buying one outright.

If you’re one of the increasing numbers of business owners considering leasing as the best way forward, here are a few things you need to know first:

1- How Long Does A Commercial Lease Last?

Car leases for business generally run between two and three years, though you may find some offers for as little as 12 months or as much as five years

2- What Happens When A Lease Ends?

Once your lease ends, the next steps are up to you. Most business owners simply choose to renew their lease with a new, more up-to-date model, though returning the car is always an option. If your car’s resale value at the end of the lease is different from the ‘residual value’ figure estimated at the start of it, you may be obligated to cover the difference.

3- What's The Difference Between Residual And Resale Value?

When you take out a lease on a new vehicle, your finance company will estimate how much that vehicle is likely to be worth once the lease ends. They call this figure the ‘Residual Value.’ Any number of things can happen to that car, and the industry as a whole, over the course of your lease, meaning that the actual value of your car ends up being different from the estimated ‘residual value.’ This actual, end-of-lease value is what we call the ‘Resale Value.’

4- Who Is Responsible For Maintenance Costs?

With a standard commercial car lease, the responsibility for repairs and maintenance comes down to you. However, lease packages such as the Trust Car lease option do cover basic essentials such as servicing, vehicle registration, tires, and general maintenance. Which saves you not just money but also time.

However, in case the car is damaged and you were leasing the car, the cost of repairs will ultimately be something you need to take care of, meaning good insurance is just as vital when leasing a car as it is when buying one. With Trust Car, if you went for a long term contract, we provide you with a replacement car in order to carry out the operation.

5- What Are Excess Mileage Charges?

When you lease a new vehicle, you agree to use it only for a fixed number of km per year. This is one way that your lease company will aim to keep the final resale value of your leased car as close to the initial estimate as possible.

For you, sticking within your agreed mileage is one way that you can avoid having to cover the difference at the end of the lease. Anything you do over that amount will be liable to pay an excess mileage charge.

These charges are calculated by taking the number of kilometers you drove outside of your agreed limit and multiplying it by a fixed cost-per-mile as stipulated in your lease contract.

Typically, excess kilometer rates are charged under EGP5, and often under EGP2 per kilometer, though these can soon add up if you drive far beyond your stipulated mile allowance.

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