Myths And Facts About Auto Leasing

Auto Leasing


Automotive leasing is becoming very relevant in Mexico thanks to the benefits it offers, however, there are still many myths around this type of financing.

This time we took on the task of investigating and answering the most common doubts and myths that people have about car leasing.

Leasing is more expensive on credit

It cannot be said with complete certainty that some of the 2 models are more expensive than the other, they are simply different and each offers certain advantages.

What we can assure with total confidence is that if you have the possibility of deducting taxes, the lease will be more beneficial. The reason is that, in simple terms, you will recoup a percentage of the investment made in the lease.

In other words, if you are a legal person or a natural person with a business activity or you are under a tax incorporation regime, an automotive lease is more recommended.

Better to buy than lease

Says a saying, buy what increases its value, rent what depreciates. It is a basic concept in economics as it seeks to increase the assets of a company by purchasing assets that increase in value over time.

Although the purchase of real estate could be a great investment since its value grows after a couple of years, the same does not happen with vehicles.

A car usually loses between 15% and 25% of its value just by leaving the agency and each year it loses more than 5% of its original value. Meanwhile, the company will be paying the initial value of it during the financing time.

It is better to buy cash to lease

This myth about leasing goes hand in hand with the previous point as many companies decide to buy their fleet of vehicles in cash. The problem as mentioned before is that the value of the car depreciates and the initial investment will always be for the total value of the asset, in this case, the car.

Although it is true that some agencies offer discounts for cash purchases and more in the fleet, there is still the problem of deduction. In cash purchases, there is a capped amount of tax deduction, while in the lease there is a greater tax benefit.

In addition, buying in cash requires much higher investment and the cash flow is lost. With a lease, you should only cover monthly rents and free up resources to invest in assets that increase their value.

Only commercial vehicles can be leased

Leasing is basically a rental system whereby it is possible to rent commercial and industrial vehicles, machinery, office equipment, among many other resources.

Even the lease allows you to forget about the sale of old and discontinued assets because simply at the end of the contract you can renew them with more modern equipment.

When leasing it is not possible to keep the vehicle

The essence of automotive leasing and leasing, in general, is to be able to constantly renew the vehicle or the acquired asset. However, there is a way to purchase the asset at the end of the contract with a finance lease.

In this modality of the lease at the end of your contract, you can acquire the asset for the residual value, that is, discounting everything you already paid during the lease. The purchase can be made through traditional or cash financing.

This model was made for people or companies who want to keep the asset at the end but want to deduct taxes in the process. At limo lux, we offer you limousine service with value so that at the end of the term you can buy or rent your vehicle.

Hiring a lease is more complicated

Leasing is no more complex or less complex than any traditional financing. The requirements of credit are very similar to those of a lease: credit history, proof of income and address, references, among others.

Even the process to contract a traditional credit and a lease are very similar, with the advantage of the latter, that the lessor makes the purchase of the vehicle for you.

Financial leasing is better than pure leasing

We must first understand that these are two different products which each offer their own benefits. We cannot say that one is better than the other because it will depend on the needs of each one.

The pure lease is essentially the rent of assets with the slogan that at the end of the contract it can be renewed with a new asset or terminate the agreement.

For its part, the financial lease offers the possibility of buying the leased asset at the end of the contract term. Although the deduction in a financial lease is not the same percentage as the pure lease, it is still possible to deduct, and you can also get lower monthly payments.

The lease is only for legal entities

Although it is true that leasing in any of its 2 modalities: financial and pure, it offers a great benefit in a tax deduction, both for legal entities, individuals with business activities, and those who are under a tax incorporation regime, can also be an option for individuals.

A financial lease is an option for individuals, it is only a matter of making numbers and knowing how much we will pay at the end of the term. Sometimes the costs are less than traditional credit.

In addition, at limo lux, you get one more benefit because it is possible to rent your limousine if you do not have a credit history or if you have an irregular user of a limousine in Denver. You can quote for free at airport transfer Parker.