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This form of financial credit is a great way for businessmen and others to have the luxury of a new car on a regular basis, without the worries of depreciation and ownership. However, there are important things to remember about the mechanisms of a car lease.

Short term car leasing is a mechanism whereby a customer (consumer) can rent a vehicle from a dealership (although the actual lease instrument is provided by a leasing company on behalf of the dealership), usually for a minimum period of 24 months. The advantage to a car lease is that you get the benefit of a brand new car, complete with dealership-offered protections and special offers, without having to worry about the car’s value depreciating as soon as you drive the car away from the forecourt.

For those people wanting a car lease of less than 24 months, however, short term car leasing is not really an option. Although very few dealerships will offer a 12-month arrangement, it is rare and usually quite difficult to obtain. A better alternative, therefore, is to consider simply renting a car if all you need it for is a period of some 6-12 months. Equally, people quite often ‘buy out’ other people from existing lease agreements, taking over the terms of their deal for the remainder of the 24-month period. Provided all the legal documentation is in order, this remains a viable option.

There are some important things to know before looking into car leasing. Although you are only effectively ‘borrowing’ the car from the dealership, the dealership has in fact sold the vehicle – in full – to the lending institution that is securing the loan on their behalf. As a result, the amount you pay in monthly repayments is directly linked to the total cost of the vehicle as sold to the lending institution; just like when you buy a car yourself, you must negotiate down the asking price, and otherwise your monthly repayments under the car lease agreement will be higher. This total price is referred to as the capitalised cost of the vehicle – and the lower the agreed capitalised cost, the lower your monthly repayments.

Some people may seek a capitalised cost reduction – that is, a down payment of some kind that ‘pays off’ some of the total value of the vehicle in return for a lower adjusted capitalised cost, and therefore lower monthly repayments. In conjunction with this, make sure you agree on an acceptable loan term – the period of time over which you will lease the car, and make monthly repayments. The longer the term, the lower the monthly repayments, but the more interest you will end up paying. Your choice!

Car 4 Leasing is a UK based online car leasing company; they offer some of the best finance deals from the biggest manufacturers across the world.