AFL-FAQ-what is car leasing-shutterstock_436325557

Car leasing is similar to car rental but for a longer period, generally ranging from 1 year to up to 7 years. When you lease a car, the car is yours to drive and operate which is similar to buying a car. However, the key difference between the two are the ownership and maintenance of the vehicle.

When you buy a car, you own all aspects of the car including the servicing, repairs, maintenance and road tax and not forgetting the depreciation cost. More often than not,  owners buy a car on a hire-purchase bank scheme which technically makes the bank the owner of the car until the loan is paid off. When it comes to car leasing, the car leasing company owns the car you drive.

The car leasing company will take care of the maintenance, servicing, repairs, road tax and insurance of the leased vehicle. In this aspect, it is very similar to rental car.

When you lease a car, you are only paying for a portion of the total car value. The amount you pay is based on the duration you will be using the car which is the lease period. It comes without the financial burden of maintaining your own car and reduces surprises such as unexpected mechanical failure of the car. When the lease is up, you can either choose to renew the lease or return the car back to the leasing company without any other expenses.

The flexibility of leasing allows one to refresh his/her driving experience within a fixed time frame, not dependant on external factors such as resale market or COE prices.

Cars that are leased out also tend to be newer than cars used for short term rental.

To start searching for suitable cars to lease, here are some points to take note of:

Identify your need

Choose your price point

Gather offers

View vehicle & understand terms & conditions

Complete handover