Personal car leasing is the best option if you can’t afford to buy a car with cash or through financing. You only have to pay a small down payment to secure the car that you want. Before availing of personal car financing, you need to know a few things, such as the types of personal car lease, the costs involved and the requirements.
What are the types of personal car lease?
Personal car lease deals are categorised into three types. The first type, and the most common leasing option, is called Personal Contract Hire. It has fixed monthly fees, low initial rental rates, and flexible terms. If you choose this type of personal car lease, you can include the maintenance costs in the monthly payment.
The next type of car lease deal is called Personal Contract Purchase. For this option, you can decide to keep the car if you no longer want to return it. You will only have to settle the MGFV or minimum guaranteed future value. The MGFV is otherwise known as a balloon payment. The total rate of the MGFV will be agreed upon before you sign the contract.
The last type is referred to as Personal Lease Purchase. In this type of agreement, you must agree to take ownership of the car after the term ends. Like the other types of personal car lease deals, you will also pay a low down payment and monthly fees.
What are the requirements of a personal car lease?
Before you can avail of a personal car lease, the car leasing company will need to conduct a credit check. They need to determine if you are qualified for the leasing deal. Most companies require applicants to have an excellent credit score. The lender will also check if you can indeed pay the monthly fees. They will look at your debt to income ratio, existing loans, and even your monthly expenses.
Some of the other qualifications they will check include the number of years you have been working at your company, your employment details, marital status and bank details. Most companies only need at most two days to conduct the credit check. They will call you right away once you qualify for the leasing deal.
What if you have a bad credit score?
Each credit company uses a different way to assess the qualifications of a car lease. As such, even if you have a bad credit history, it’s still worth it to submit your car leasing application. In case you get declined by one company, you can seek other options. Some of the options you can use include a joint financing application. You can also try looking for a guarantor. The guarantor is the third party who will pay the monthly fees if you fail to settle the agreed monthly payments.
Before you file a car lease application, make sure that you understand the process. Check the requirements and consider what type of leasing option suits your needs best.