Operational leasing or Leasing

At the end of the day, what are the differences?

Isn’t it normal to talk about leasing when you mean operational leasing? Is it the same thing? This is a topic that causes a lot of confusion. We’ll help you to find out the differences and make the best choice for you!

 

Operational leasing

Operational leasing, or long-term operational leasing, is a mobility solution that allows you to benefit from the full use of the car you’ve chosen by paying a fixed monthly rent, without worrying about the costs associated with its usage as they are all included in the service.

The monthly rent is defined according to the type of car you want to drive (make, model, etc.), the duration of the contract (the minimum is 12 months, but usually the contracts have a duration of up to 48 months), the number of kilometres you want to drive according to your company's needs and the services included. Usually without any down payment.

The operational leasing service includes - and consequently on a single invoice - all the costs related with the usage of the car: preventive and corrective maintenance, car insurance and a financial guarantee, road assistance, tyres, replacement vehicle, IUC (Road tax) payment, mandatory periodic inspections (MOT), accident management, 24/7 customer support(targetSelf:/en-pt/privatelease/services/customer-support /) and personalised follow-up. This will allow you to have greater control over costs and financial availability to meet other specific expenses or business needs.

Not all operational leasing contracts in the market cover the same services. You should always bear this in mind when comparing proposals.

When the contract ends, you will have the flexibility to decide what you want to do: you can choose a new contract and drive a new model, extend the duration of the contract or request the purchase of the car. In the latter case, you will have to wait for the end of the contract to know the car commercial value.

If you exceed the predefined kilometres or fail to use them in full, this will correspond to an increase in value or compensation, according to the conditions defined in the contract.

The customer is responsible for the use and maintenance of the car during the contract period and must return it under the conditions indicated in the Driver's Manual. With the worries in mind at the end of the contract, reconditioning insurance is the protection that ensures that your car is protected against any damage not covered by the normal use of the vehicle.

 

Leasing

Car leasing, or financial leasing, is a model of financing new or used vehicles for a certain period, usually between 12 and 96 months. As it is a flexible model, you can always extend the term of the contract, as long as it does not exceed 96 months or pay the full contracted amount early.

Leasing is carried out with financial entities, or even through the car manufacturer's own makes. And the payment is made by way of a monthly fee with a fixed or variable interest rate. However, the interest rates applied to leasing are usually lower and more attractive than other types of financing such as car loans.

It is a form of car purchase which only includes the financing, in other words, the car purchase price, but it does not include any service. The customer, in addition to paying the monthly fee, will also be liable for all maintenance recommended by the manufacturer, repairing any unexpected breakdowns, directly with the make or in certified workshops, taking out car insurance with full cover and in accordance with the conditions established in the contract, make payment of the IUC (Road tax) and carry out the mandatory periodic inspections (MOT) whenever necessary.

At the end of the contract, the customer decides if wants to keep the car, purchasing it by paying the residual value of the vehicle - a percentage of the total value of the car - previously agreed, and so the car will be transferred to client name. Otherwise, the client must return the vehicle.

If, on the other hand, you are thinking about buying a car, check out the differences between operational leasing and purchase.

  1.  
    For whom?

    Both operational leasing and leasing are suitable for any individual or entity, whether it is a company, sole trader or professional.

In summary, the main differences are:

Operational leasing

Operational leasing means less work and more predictability and cost control.

The goal is to use the car for a period of time

  • In addition to rental, all services are included in the fixed monthly rent
  • Car insurance is already included in the monthly rent, you won't have to worry about it
  • Flexible duration and kilometres - usually without  any down payment
  • More competitive prices due to the bargaining power of operational leasing companies
  • 24-hour support customer assistance                                                               
  • Dedicated account manager and online tools  
  • Cost control and more free time 
  • At the end of the contract, if you choose to purchase the car, only then will you know the commercial value of it
  • Penalty for early termination of the contract

Leasing

Leasing is a financing alternative to car loans.                                            

The goal is to purchase the car

  • Advantages of taking out insurance with external insurers                      
  • Flexibility in defining timeframes, the down payment and the residual value of the car
  • Bargaining power as with the purchasing of a new car                                   
  • It only includes the down payment                                                                
  • Services such as maintenance, tyres or replacement vehicle are not included
  • Penalty for early termination of the contract

Was it clear?

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