Deciphering the jargon in leasing contracts can often be confusing and time-consuming, especially when you’re signing up for an electrifying new experience like leasing an electric car. You’re not only dealing with traditional vehicle lease terms but also those that are particular to electric vehicles (EVs). This can make the process seem overwhelming, but armed with the right knowledge, you can navigate the terminology with ease. In this article, we will take you through some essential terms, which you’ll encounter when leasing an electric car.
Leasing an Electric Car
When you hire a vehicle for a fixed period, typically between two to four years, and return it at the end of the agreement, you are essentially leasing an electric car. Leasing offers a plethora of advantages over buying outright, especially as EV technology advances at a rapid pace. Unlike traditional car purchasing, leasing allows drivers to better keep pace with the swift development of EV innovation, enjoying the latest models and their associated benefits every few years. Plus, it’s usually cheaper than purchasing upfront, allowing access to higher-end models.
Residual Value
A key term in the world of vehicle leasing, especially pivotal in the context of electric cars, is ‘residual value’. This term represents the predicted value of your vehicle at the end of the lease, considering depreciation. The residual value is vital because most lease instalments are calculated by subtracting this predicted amount from the vehicle’s retail price. Since electric cars, particularly those of higher-end brands, have a slower rate of depreciation, they often possess high residual value, enabling potentially lower lease payments.
Battery Lease
Among the terms exclusive to EVs, battery lease is one that may cause some confusion. Like a typical vehicle lease, a battery lease permits you to use the car’s battery for a specified time. Some car makers, such as Renault, offer vehicles with a battery lease separate from the car lease itself. This system can dramatically reduce upfront costs and provide reassurance, as any battery performance issues will be addressed as part of the lease.
Mileage Allowance
Mileage allowance refers to the distance that you are permitted to travel in the leased car over the duration of the lease contract. Going beyond your stipulated or ‘excess mileage’ may result in additional charges. It’s essential to estimate your annual mileage accurately to avoid these charges. If you plan to use your EV for long-distance travel, consider a leasing agreement with a higher mileage allowance.
Fair Wear and Tear
This is a common term you’ll come across in every car lease agreement, not just for electric vehicles. Fair wear and tear refers to the expected depreciation of the car due to normal use. However, if the vehicle has damage or wear beyond what’s considered ‘fair’, you may be billed for additional repairs at the end of the lease term.
Long-Term Vehicle Leasing
Long-term vehicle leasing refers to leasing agreements that typically extend for two to four years. These types of leases can be particularly beneficial for electric vehicles, as technology improvements are moving at a rapid pace. Every few years, as your lease ends, you have the opportunity to upgrade to the latest model and keep abreast with technology advancements and improvements in range.
Handing-Back Process
At the end of your lease period, you need to return the vehicle. You will likely need to arrange a date with the leasing provider for them to retrieve the vehicle. Be aware that before acceptance, they will inspect the vehicle to ensure it aligns with the fair wear and tear guidelines.
In summary, understanding the key terms associated with leasing an electric vehicle will help you select the right deal for your specifications and budget. As you step into an environmentally friendly, economical, and electrifying journey on four wheels, knowing electric car leasing terms will certainly pave a smoother and more confident path.
