Cars For Lease: Term Types

In dealing with cars for lease, the documentation is a binding, legal contract allowing the consumer to occupy and use the property for a specified time and for a specified amount of money paid for the right. Different lease types are available and these can vary in particulars based on local laws governing execution of these transactions. Here are different types of vehicle leases:

1. Finance
This type of lease is also called a financial sale. It allows for the actual cost of the vehicle to be spread out over several years making payment arrangements attractive. This is not a rent-to-own arrangement but the lessee can purchase the vehicle contract expiration for much lower than market value.

2. True Lease
This type of lease is also known as a “tax” lease and is the popular choice for consumers seeking quick tax advantages. This lease is typical for vehicles used for 100 percent business use and the contract is in a business name. As with a financial lease, at contract expiration the lessee can purchase the vehicle at a reduced cost.

3. Operating Lease
This is the best choice for consumers seeking rapid tax advantages when leasing a car. Considered a short-term arrangement, these contracts are normally for three years or less. The terms outline a greater “ownership” responsibility on the part of the lessee in such areas as maintenance, mileage and wear and tear. This does, however, result in lower monthly payments. And, the lessee does have the opportunity to purchase the vehicle at contract expiration for fair market value.

4. Skip Lease
This is a popular lease type that allows for certain payments to be “skipped” during the term of the contract. It is used widely by school systems, agri-businesses and other seasonal companies seeking no payments during their “off” seasons.

Knowing what different types of lease terms are available will certainly help you break down foreign terminology and put you in the best situation for leasing a car.