International Conference of Fundraising Managers

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A Different Way to Have Use of a Car

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Most people who drive a car either own it outright or take out some form of loan to support their purchase. This has been the traditional way for decades. But, what about a new way of thinking which at last has caught up with the masses of drivers in this country – leasing a car?

Originally car leasing was the mainstay of commercial funding for business vehicles and equipment. It was a very clever way of 'off balance sheet funding' company expenditure to help manipulate and dress up a company's results. The company in various ways effectively 'rented' the car and caused favourable conditions for taxation.

Over the last 10 – 15 years personal car leasing has come to the forefront of peoples’ thinking and is now recommended by salesmen as an ideal way of financing a new or used vehicle. A deposit is taken based upon the cars underlying value and then a projection is made of the value in say one, two or three year’s time and a lease rental is agreed balanced by the interest rates appertaining at the time.

The net effect is that you don’t actually own the car but you have the use of a depreciating asset that you are able to offload (dependent upon the contract) at a fixed time. You will be bound by certain conditions of mileage, servicing etc. but in essence you can generally assist your personal cash flow and not get stuck with an old vehicle at the end of the contract.

A lot of people cannot see the benefit of not owning a car, but when they really understand the principle behind leasing and the possible tax benefits too, their eyes will be opened to a refreshing way of driving a car.