What to pay attention to when choosing a leasing company?

Choosing the right leasing company is not easy, first of all because in the vast majority of cases we do not focus on those elements which, in general, will be the most important for us.

How can this be changed?

Fortunately, this is not such a difficult task at all. The first step should therefore be for us to analyse the total cost, which is usually expressed as a percentage. It is still the basic parameter used in various comparisons. Of course, it is also good to note that it is often added to the redemption amount.

Companies that do not do so may at first glance be a little more attractive, but a complex analysis of their offer usually leads to the discovery of what the trick they used. Another factor is the number of instalments, because here, too, there are quite different approaches. There is no shortage of leasing companies, for which three-year lease is the one consisting of 35 installments, although the number 36 is also known. Already for this reason, the total cost of the investment waiting for us may change. This is not a rigid parameter, so we can always be interested in whether it is possible to change it.

Another issue that cannot be underestimated is the one that relates to interest rates themselves, because it should not make no difference to us whether the interest rate is fixed or variable. Most often we are dealing with the latter case, although it is also good to obtain information on what it is based on. When installments are variable, we should also obtain information on what principles and when the leasing company can change the amount of installments. Each company has its own policy, and the awareness of its assumptions is able to contribute to the change in our decision to choose one and give up another solution.

Leasing companies must also inform us about the amount we will have to pay after signing the contract, and even before we collect them, the object of lease. Here, the information included in the offer is often a bit inaccurate, because sometimes there is no mention of insurance and other charges. It is good to obtain this information in good time, as it may turn out that it will save us from signing a contract that is unfavourable from our point of view.

If you are interested in car leasing, it would be a good idea to ask about the cost of car registration. It may turn out that the formalities in this respect are dealt with by the leasing company itself, although it turns out much more often that this is an obligation which rests on the shoulders of the customer. There are also companies that agree to reimburse the cost incurred in the communication department, but sometimes they add additional fees themselves, which is their additional income. A very important cost, which we have to take into account when deciding to lease a car is insurance. Therefore, it is always worthwhile to compare the rates that are in force in individual companies. The differences usually do not seem to be large, and yet the 0.5 percent we save on the total cost can be squandered at this stage.

In particular, it seems important to know how the insurance will be calculated in the following year. Sometimes we deal with companies that tempt us with low insurance in the first year of cooperation, but the longer we have established business relations with them, the higher the cost is mentioned. Importantly, the indication of the percentage alone often does not seem to be sufficient. It does not give anything if the value of the car used by the insurer in its calculations is unrealistically high.

If there is a risk of such practices, let's make sure that in the following years we will be able to propose the lessor of the insurer, who will offer us much more attractive terms of cooperation. If there is such a possibility, it is good to get to know its conditions, because it may turn out that they will be developed in such a way as to discourage us to such a solution as much as possible.

Another point worth mentioning is whether the insurance is re-invoiced or issued by an external agency. The insurance is exempt from VAT when it is issued by an external agency. Reinvoicing involves the need to add 22% VAT to the received value and once again it turns out that we are dealing with an offer that is only seemingly very attractive. Another issue worth checking is the possibility of assigning a contract to another company. Usually there is no problem with this, however, it should be reckoned with the fact that the contract with another entity will be concluded as a new one.

Unfortunately, it is often an obstacle that can be difficult for us to get through. Although we all avoid such events, in order to make sure that we have chosen wisely, we should be interested in what consequences we have to take into account if there are arrears and delays in the payment of installments. It is often the case that the demand for payment itself entails the payment of an additional amount, and it often turns out that this is not a symbolic amount at all. Different companies also give themselves different time to terminate the contract, although some also allow for the possibility of its renewal. Of course, in this case, too, it is to be expected that this will entail the need to incur additional costs, often those which are often prohibitive amounts.

As is the case for any other loan, the table of charges is valid for any lease agreement. This one was created to make it easier for us to make a choice, so it should be our duty to get to know it. Here you will find information about penalties and fees, and the table of charges will also tell you if there are any restrictions on early termination of the contract. If we are interested in leasing used fixed assets, it may be necessary to make a valuation in order to enter into an agreement. Not all companies oblige us to do this, and it is not difficult to guess that the costs associated with the valuation can be varied. It is not insignificant when we can pay our first monthly installment and whether it is possible to set a date for subsequent payments. The ideal situation is when this loss is not paid a few days after the collection of the item that we have decided to lease, and sometimes it turns out that we can indicate the day of the month in which we would like to pay it back.

If we decide to lease in foreign currencies, we have to take into account the spread, i.e. the difference between the purchase and sale rates of a given currency. Here, too, we may have to deal with considerable discrepancies, and experience with franchise loans confirms that the latter can be very unfavourable. The value of the leased asset in a foreign currency may also be of great importance. After all, it will be the basis for further calculations. The value of the first instalment can be calculated in several ways, so it is advisable to make sure which one has been chosen by the lessor with whom we have entered into cooperation.