Lease Like Credit Contract

Waimarino Bulletin, Volume 5, Issue 11, 11 August 1987, Page 2 (Supplement)

Lease Like Credit Contract

In this article, John Chetwynd of Moller Johnson Finance, describes the two forms of car lease currently available in New Zealand and discusses their advantages and disadvantages. Car leasing is no longer just a means of circumventing the regulations of car purchase. In today's deregu- „ lated purchasing environment, leasing should be assessed on the true benefit it offers in releasing valuable wdrking capital. The car lease also offers

an attractive rental rate because leasing companies generally negotiate discounted prices for vehicle purchase which are reflected in the charges passed onto clients. Overseas, car leasing accounts for a significant portion of vehicle saies, but in New Zealand car lease has been taken up very much on the rebound of consumer reaction to purchasing regulations. For example, when the Credit Stabilisation Regulations required car buyers to .

place a minimum deposit of 60% and pay the balance over 12 months, lease arrangements available at the time only required a deposit by way of advance rentals amounting to 50% of the purchase price with three years to pay a portion of the remaining balance. A residual or book value remained at the end of the 3-year term. Accordingly, leasing enjoyed a boom period. Today, two forms of leasing exist in New Zealand, Continued on Page 4