Km Restrictions in Purchases as well as Leasing

Did you know that lease contract km parameters/limits are set by the Levi Yitzak purchase catalog, not the lease company?  This may sound like a distinction without a difference, but  we assure you this is not the case. 

Possibly the number-one myth surrounding a purchase versus leasing of a car is that when buying a car there are no km restrictions. This is indisputably NOT the situation.  There is only one way to avoid km restrictions: buy a car, and at the end of its life, strip it of its registration thereby taking it officially off the road and selling it for scrap metal.  

Full disclosure —  once a car reaches its’s 10th birthday the kilometers become less of an issue, since most of the value the car is gone by that time, and it will be a cash sale anyway.  This will not, however, stop the prospective buyer from using the overages in negotiations, although at a diminished capacity.   

If, however, you are in a new or new-ish car, the 20,000 km per year average is always in effect. The only difference lies is in how and when you will pay for these extra kilometers.  In a lease, you will pay contractually;  in a purchase, you will pay it effectually (adjustment to future value using the Levi Yitzak catalog at point of sale).  The leasing companies are simply setting themselves up for the eventual sale of the vehicle you leased once it’s completed its contract period. 

You are allowed to increase the kilometers per year, which will increase the payments slightly since the typical depreciation is going to be accelerated by the additional kilometers, but it is preferable, and more economically feasible, to adjust the contract payments before instead of paying the penalty at the end.  

Author: ianglo

Just a transplanted Texan living in the Land of land's, Israel. Started maintaining and repairing cars at 9 years of age in my father's auto shop (not sure how much of an asset I was at that time). Later I became interested in helping people find and finance these expensive and necessary machines. Check out the website see if I or my staff can be of assistance to you.

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