Due to its flexibility and cheaper initial costs than buying a car outright, car leasing has become popular among private individuals and companies. However, the decision between a 12-month and a 24-month lease might have a big effect on your total costs.
Discover the main factors and cost variations between these car lease terms and learn how a leasing company in Singapore can help you find a suitable term.
Upfront Costs and Deposits
When signing a car lease, upfront costs such as security deposits, administrative fees, and the first month’s rental payment are standard. Typically, leasing companies offer reduced initial payments for longer lease terms.
- 12-Month Car Lease: Higher upfront costs due to the shorter lease term. Leasing companies might charge more in deposits and administrative fees as the vehicle needs to be re-leased sooner.
- 24-Month Car Lease: Lower monthly payments and deposits because the cost is spread over an extended period, making it more budget-friendly for long-term use.
Monthly Rental Rates
Monthly rental rates differ based on the lease term. Generally, a longer lease term results in lower monthly payments, making a 24-month car lease more cost-effective.
- 12-Month Car Lease: Higher monthly rates due to the shorter amortisation period. This option can be ideal for individuals with temporary assignments or expatriates with short-term contracts.
- 24-Month Car Lease: Lower monthly rates as the leasing company spreads the vehicle’s depreciation and maintenance costs over a more extended period.
Maintenance and Servicing Costs
Most leasing companies include vehicle servicing and maintenance in the lease package. However, the inclusion and coverage can differ based on the lease term.
- 12-Month Car Lease: Maintenance might be minimal due to the shorter duration, but any major servicing could still be a responsibility, depending on the contract terms.
- 24-Month Car Lease: Comprehensive servicing and maintenance plans are often bundled in, reducing unexpected expenses over the lease period.
Insurance and Road Tax
Car leasing packages usually cover insurance and road tax. These costs increase proportionally with the lease term.
- 12-Month Car Lease: You pay for a single year of insurance and road tax, which can be beneficial if you only need the car temporarily.
- 24-Month Car Lease: You will pay for two years of insurance and road tax, but leasing companies may offer discounts for longer lease terms.
Flexibility and Commitment
Flexibility is critical when deciding between a 12-month and a 24-month car lease. The longer the lease, the less flexibility you have if your situation changes.
- 12-Month Car Lease: Offers flexibility and lower commitment. Ideal for short-term needs, but costs per month can be higher.
- 24-Month Car Lease: Lower monthly costs, but early termination penalties could apply if you need to end the lease before the contract term expires.
Vehicle Depreciation and Resale Value
Though car leasing removes the burden of vehicle ownership, depreciation still affects lease rates. Longer leases often benefit from lower depreciation-related fees.
- 12-Month Car Lease: Higher depreciation rates factored into the monthly payments, increasing overall costs.
- 24-Month Car Lease: Reduced depreciation impact as the vehicle remains leased longer, leading to better monthly rates.
Final Thoughts
Your unique needs, financial status, and the time you need the car will determine whether you choose a 12-month or 24-month lease. Although a 12-month car lease gives you more freedom, the monthly payments are greater. On the other hand, a 24-month auto lease necessitates extended commitment but offers long-term savings.
Consider speaking with a respectable leasing firm to find the best lease terms and packages tailored to your needs. You may choose the most economical leasing choice by weighing cost, flexibility, and long-term use.
Contact Eurokars Leasing to experience hassle-free car leasing today!
