News The Economics and Responsibilities of Leasing Vehicles

The Economics and Responsibilities of Leasing Vehicles

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Acquiring a car is typically one of the single-biggest investments for an individual. When the time comes to consider a vehicle acquisition, there is always a struggle to decide between an outright purchase and a lease agreement. Generally it makes better financial sense as far as monthly cash flows are concerned to go in for a lease since you end up with a lower monthly outgo than if you were buying a car through finance. This is because you are only paying for the depreciation value of the car rather than the full value of the vehicle. Car leases also involve less initial fees and you might even be able to get a waiver on the down payment, not to speak of less sales tax that becomes applicable on the monthly payment rather than the vehicle sales value.

Lesser Cost of Ownership

With some hard bargaining you may be able to negotiate a lease agreement that permits a lesser rate per mile over what is the typical allowable limit of 12-15,000 miles per year. This could end up being a real money saver if you clock up much more than what the lease agreement allows. If you opt for a lease, you can also get tax deductions on the finance and depreciation costs that might come in very handy if you use the car for business purposes. However, the greatest advantage is that a lease invariably works out cheaper if you intending to keep the car for only a few years, though terminating a lease agreement prematurely may work out very expensive unless you take recourse to online car lease platforms such as leasequit.com

The Economics and Responsibilities of Leasing Vehicles

Responsibilities of Operating Leased Vehicles

When you take a vehicle on lease you are required to execute a contract that specifies certain responsibilities by both the parties. Generally speaking, you are required to take care of the car and maintain it so as to ensure it keeps its fair market value. This means that you need to drive it carefully and get it serviced at the intervals specified in the contract or in the car’s service book. This is usually once a year or every 12,000 miles, and unless you have entered into a separate maintenance agreement, all costs of servicing the car will have to be borne by you.

Keep in mind the lease company is well within its rights to claim compensation for damage and excessive wear and tear as per the terms of the agreement. You will also need to keep the car fully insured and be up to date with road tax payments. At the end of the lease, the car needs to be returned in a clean and roadworthy condition with all equipment, keys, and documents.

Responsibility of Paying Traffic Violation Fines

Even though you are technically not the owner of a leased vehicle and notices of traffic violations of parking fines will not be usually served on you, you are still responsible for all actions and misadventures that take place with your car as the registered licensee. Since the leasing company will be receiving the notices regarding traffic violations, it may choose to pay them off to prevent accumulation of the penalties but ultimately you have the responsibility of reimbursing the lease company. This will usually be enumerated in the lease agreement and even if not specifically mentioned, it will always be your responsibility.

No Permissible Legal Defence against Traffic Violation Responsibility

The lessee cannot put up any defence that at the time the traffic violation had been committed somebody else had been driving the car. The car is deemed to be in the custody of the lessee and it is he who will be accountable for all actions committed with the car during the lease period. In case there is a dispute between the authorities levying the fine and the lease company regarding payment of the traffic fines, the lease company is at full liberty to inform the court of all the details of the lessee to enable appropriate action to be taken against the lessee.

The Economics and Responsibilities of Leasing Vehicles
General Contributor
Janice is a writer from Chicago, IL. She created the "simple living as told by me" newsletter with more than 12,000 subscribers about Living Better and is a founder of Seekyt.

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