Often, the term flex leasing is used when renting expensive or special cars, but the flex leasing concept does not really mean so much to the consumer or, in this case, the lessee.
What is flex leasing?
Flexleasing simply means that the tax on the car is paid in instalments. On new cars for up to three months, two % of the calculated tax is paid per month.
Cars between 3 months and 3 years trigger a payment of one %, and when the cars become three years old, flex leasing becomes really interesting.
On three-year-old cars, the tax is 0.5 % of the calculated tax per month.
What is financial leasing?
When you hear a word about flex leasing expensive cars, you are actually talking about financial leasing. A lease form that requires open eyes as the lessee is at greater risk of loss. A risk to be offset by lower payment than in operational leasing.
While the private leasing market is mature and characterized by transparent standard contracts, a financial leasing contract requires a slightly sharper eye. Because even if you can save money, the trees do not grow into the sky.
There are stories about leaseholders who have burned their fingers on financial leasing. And it’s especially these four things you need to be aware of:
Expensive cars are the most obvious for flex leasing
Flexleasing can provide a good saving on the expensive cars because the registration fee is paid in instalments during the months you use the car.
1. Residual value/scrap value in financial leasing
Here we find the most critical of financial leasing based on flex leasing. Residual value or scrap value is the price the car is to be sold to when the lease period is over. And it’s worth noting the registration fee, as there is no charge for the entire car, but only for the period, the car is used.
Calculating the price is not easy, as it is out of the future, but try to look at the current prices of similar cars at mobile.de. If your residual value is slightly below the price you can find here, then the residual value is too high.
And what does that mean? Yes, when the car is to be handed in, you will pay the difference between the residual value of the lease and the price the car can actually be sold for. For example, if the scrap value is 13500, but the car can only be sold for 115,00, it will cost you 1500 to hand over the car.
If you’re unlucky, it may cost you a lot of thousands of dollars to deliver the car. So when comparing two lease deals, look at the scrap value – if there is a difference then it should be added to your costs. A scrap value is 1500. Higher costs you really 1500 extra during the lease period, so that’s an important detail.
Note that first-time allowance is often used to write down the value of the car; you pay a lot of the loss on your car immediately.
Notice of Buyer
In many contracts, you as a lessee must assign a buyer to the car when the lease term is completed. This may give some challenges because the market for cars without taxes is not quite large in Denmark.
The car is, therefore, most interesting for someone who wants the car on a new flex leasing contract or a car dealer who will sell or lease the car again. Some providers offer to buy the car back, but the deal is usually most favourable if agreed in advance.
You may assign yourself as a buyer, but the leasing company may not be required to sell to you if it has another buyer. Most leasing companies will require that sales be made to a company in order to avoid giving a right of warranty.
Repairs and service are usually not included in flex leasing
Repairs and Complaints
In many financial leasing contracts on flex leasing, you are dependent on repairs and service. If something breaks, then it’s yourself that has to pay from driving over the curb for the first time. In many cases, you can draw a service contract and thus minimize the risk of unforeseen expenses.
But generally, it is you who will be responsible for everything. This is not the case with ordinary private leasing, where the contract is typically the standard contract prepared by FDM and Finance and Leasing.
The bankruptcy of the leasing company
Fortunately, it’s a rare phenomenon, but if your leasing company goes bankrupt, your car is owned by the bankruptcy estate. It’s extra bad when we speak financial leasing since the initial benefit is typically quite high.
It probably loses you because you know bankruptcy can only put you in the queue of creditors, and banks and lawyers get their part first. So check that it’s a reputable company you trade with – minimizing the risk.
Financial leasing may be a good idea, but it requires a little more attention than traditional private leasing, also known as operational leasing.
When you control the contract, financial leasing based on flex leasing is still the cheapest way to keep your car on. Just keep your eyes open when you read the contract.
Calculate the flex leasing cost here: rudefix.dk/flexleasing.php