Leasing provides the use of an item for an agreed period, during which time a rental is paid. At the end of the term, the goods can either be returned, you can acquire ownership or extend the lease. With almost a third of consumers now choosing to lease their vehicles in the US more than ever before, this method of financing is yet to properly catch on in Nigeria.
According to credit information firm, Experian, 31.5% of new vehicles financed in the US in first quarter were leased – an all-time high, and up from 24% just five years ago.
The concept is relatively new in the country, but it can be seen as an attractive option amid rising interest rates, petrol prices, inflation, and a weakened Naira.
Here are 3 easy ways you can access the use of a car in Nigeria
- This finance facility allows a person to buy vehicles and other assets, and pay for them over an agreed period.
- The benefit is that ownership will pass to the consumer automatically once they have made the final payment.
- Owning a car also carries none of the economic penalties or mileage restrictions experienced with leasing and renting.
- A lease agreement is not only available to companies, but also to individuals and self-employed people.
- The lease agreement allows the customer uninterrupted use of the vehicle rather than ownership of it.
- You can choose to take ownership of the vehicle or return it to the bank at the end of the agreed period.
- You can drive a brand new car every two to four years and benefit from the safety, fuel economy and performance advancements found on newer models.
- Balloon options are also available under lease and installment agreements – you will be obligated to pay this at the end of the term, but you benefit from reduced monthly payments.
- A rental agreement is available to individuals and offers you varying repayment periods like annual or quarterly.
- Like a lease agreement, a rental agreement allows the customer uninterrupted use of the vehicle rather than ownership of it.
- To reduce monthly payments, the customer can negotiate a residual value. Residual is normally the asset risk accepted by the bank as long as certain return conditions are met at termination of the rental.