A renewed lease is one of the easiest and most cost-effective ways to lease a new car, and you don’t have to earn a high executive salary. It is a three-way agreement between a financier, an employee, and an employer. Here is an overview of this type of lease package:
How does it work?
The innovated lease is likely to be for two, three, or five years. After the lease term expires, it is possible to upgrade the lease to a newer model or, if preferred, pay a buyout fee to take full ownership of the vehicle.
This type of leasing package has a variety of benefits and is different than a typical car loan. Innovative leasing is paid for with your pre-tax salary, which means your money has the potential to go further and is helpful in reducing a person’s taxable income. On the other hand, the regular loan makes use of your salary after taxes.
The actual process for the employee is relatively straightforward. Most companies have set up a system to allow employees to enter a preferred lease term, car type, and current salary to give a clear indication of the options available to them.
What are the benefits?
Tax Effective – An important benefit of the renewed lease is that it is very effective and you can pay for the car and running costs using pre-tax income.
Greater Purchasing Power – The ability to lease through a fleet company is sure to give you more choice in the type of car you can drive. The discount opportunities of using a fleet provider are much more competitive compared to what you could get if you walked into a dealership on your own.
Easily upgrade your car – Another big plus is the ability to trade in the vehicle after the lease is up. This kind of flexibility is great for those drivers who always want to drive the latest models.
Service Requirements – This type of arrangement is also useful for managing all of your service requirements. The cost of vehicle maintenance is often included as part of the lease package.
Is there any risk?
In addition to the many different benefits, there are also some potential pitfalls worth considering. For example, it is essential to have job security to ensure that this type of tenancy is maintained. Also, in recent years, the tax benefits of a new lease have slowly started to decline.
