International AutoSource is an Expat program that provides car leases to Expats without a local credit. But you may be asking yourself, “what is a car lease?”. Not to worry, this article explains it all!
What is a car lease?
A car lease is a contract by which a person obtains a vehicle for a specified term and for a specified price. In other words, a car lease allows an Expat to obtain a vehicle for a pre-determined amount of time. When the contractual time ends the Expat can decide to return the vehicle back to the company they leased through, or they can choose to purchase the vehicle.
Types of Car Leases
There are two types of automotive leases available in the United States; an open-end lease and a closed-end lease.
As an Expat, it is very important to know the difference in order to select the option that will be the most cost effective.
Most common for commercial use whereby the lessee takes all of the financial risks. The down payment and monthly payments on open-end leases are much higher, and the total cost of the lease is unknown until the end of the lease agreement. If at the end of the lease the residual value of the car is lower than expected, the lessee must cover the difference.
An open-end lease is presented as the most flexible option where the lease can be terminated at any time without penalty. However, lessees end up paying more for this flexibility as the higher monthly payments exceed those of closed-end leases plus there is added financial risk when the lease is terminated.
A no-risk lease agreement with all costs known prior to going into the lease. At the end of the leasing term, the customer simply hands back the keys and walks away from the car. The customer also has the option to purchase the vehicle at any point during the lease at a pre-determined residual value. Payments are based on the lease term, down payment and expected number of miles a customer will typically drive in a year (12,000).