Renewal leasing is becoming an increasingly convenient, cost effective and common way to operate a vehicle. For many people, owning a car is not always the best or cheapest option. A car is an asset that depreciates and will soon begin to lose its value. Therefore, a useful alternative is innovative leasing that comes with a variety of practical benefits.
Here are some of the benefits of innovative leasing:
1 – This type of leasing system is designed to allow the employer to take payments for the car and maintenance of the employee’s pre-tax wages. This is helpful in reducing taxable wages and also in reducing the income tax that will be due throughout the year.
In addition, the lease may include additional expenses on top of the principal lease payment, such as running costs such as maintenance, registration, and fuel. Therefore, it is possible to rely on pre-tax wages to pay for these daily costs and perhaps help reduce taxable income further. In the event that the funds set aside for operating expenses are not depleted, there is an option to have this money returned to the employee.
2 – For many employers, the option to offer innovative leasing can provide a simple and cost-effective method of adding significant value to an employment package. This will surely make a company more attractive when it comes to retention or recruitment.
3 – It is a practical alternative to a company that manages a fleet of its own vehicles. In the event the employee leaves the company, the lease and any future payments or obligations will go with them. This helps to remove much of the burden on a business to manage and maintain a large number of vehicles.
Therefore, this helps to eliminate much of the risk that falls on the company. The lease agreement instantly transfers to a two-part agreement between the former employee and the finance company.
Disadvantages
Beyond the extensive benefits of innovative leasing, there are also some drawbacks to this particular type of auto financing. For example, tax benefits may vary with different individuals. It is generally more favorable to employees in the higher tax bands. There are leasing companies that will say which dealer can be used to purchase the car. This can limit the general choice of vehicles and also the ability to negotiate the price. Additionally, lease agreements contain a variety of clauses that must be fully read and understood before proceeding.