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Buy a Vehicle on Cash or Get It Leased

By George Mathew Subscribe to RSS | July 10th 2012 | Views:
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For the purchase and sale of BMW Dubai offers a wide market with different customers. Each customer has different preferences for the type of vehicle that he wants to purchase. The purchase price of the vehicle is different and varies as per the type model and condition of the vehicle.

Vehicles can be purchase individually or for corporate purposes. Individuals purchase vehicles for their own or household purposes and corporate clients purchase a fleet of vehicles to award their employees with the company maintained car. The corporate client purchases several vehicles and is considered to be more profitable than the individual client. Vehicles can be purchased by both individuals and corporations under finance lease or by cash. The former method is generally followed and finance lease rentals are paid as per the terms of the agreement. These rentals are combination of two amounts one the principal and the other is interest. Any asset purchased under any finance lease contract is recorded by the lessee in its own books of accounts or financial statement. The lease involves two parties that is a lesser and the lessee. There is one more category of lease which is called by the name of operating lease. The rental to be paid under a lease can either be at the beginning or end of a payment period. This payment period can be annual or semiannual and also quarter and monthly depending upon the asset that is leased. However in case of vehicles rentals are normally paid on monthly basis. The lease is executed by paying a certain deposit with accounts for around ten percent of the initial purchase amount. In some cases the lease has a bargain purchase option which entitles the lessee to get the legal ownership of the leased item against the said initial deposit.

There are also situations in which the owner of the lease property sells the leased item which may constitute a plant or machinery or vehicle and immediately leasing it back. This process is known as a sale and lease back transaction. This transaction is in effect a loan transaction in which certain loan amount is advance to the lessee. This is an effective transaction is cases where the machinery or plant has some special specification that needs to be properly suited to the needs and wants of a particular company. The other factor in purchase as mentioned in the lines gone past is operating lease. This form of leasing is different from the finance lease in some respects. Firstly the ownership is only transferred after all the operating lease payment has been made. Further the lease rentals in case of operating lease are a straight deduction from the profit and loss account of the company and are considered in the determination of profit or loss for the year. Secondly the risks and rewards associated with the property is not kept with the lessee and he or she is not entitled to record it in its books of accounts or simply in its financial statements. For such leasing contracts trading in Dubai has become significantly easier and simpler. Further the role of autotrader UAE has significant implication in the current environment as well.

George Mathew - About Author:
George Thomas is a mechanical engineer who have years of experience in Auto industry. He is also giving advice for Dubai Car owners and Philippines automobile companies specially trading in Dubai | autotrader UAE.

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