Tips And Ideas For Loan Lease

Introduction

If you have taken a loan to purchase an asset you end up paying more than the actual value of that asset in installment. Loan lease is an important coverage when you more than what you own. Some assets like a real estate may have an appreciating value, that is, its value may increase with time. In this case by the time you have paid all you installments of the house loan you may have taken to purchase the property, the value of your property would have increased much more than what you paid for it. However, some assets have a deprecating value like a vehicle where with time they grow old and their actual value in cash keeps decreasing. Loan lease is a good option for such assets. We offer you some tips and ideas that will help you decide loan lease plan for your asset.

Step 1

Understand the basics:

Maximum payout offered by Loan lease is 25% of your assets actual cash value. Actual cash value is calculated from a variety of factors like for a vehicle its age, condition, prior damage if any, improvements or special equipments fitted are taken into consideration. There are a few requirements you must meet before applying for loan lease. Your loan must be lent out by an organization and not an individual and your asset must be fully insured. You will receive loan lease payout only when the relevant insurance company will approve that your asset has been totally lost.

Step 2

When do you need loan lease?

Loan lease is an important coverage when you owe more than what your asset is worth. For example, if you take a 3 years car loan to purchase a car. But after 6 months your car is stolen. Due to depreciating value of the car, the actual cash value evaluated by insurance company can be 3/4th the actual value. In this case, if you have purchased a loan lease for your car, as much as 25% of the gap between current ACV and the amount you paid for the car will be covered by loan lease program.

Step 3

Know your eligibility:

Loan lease coverage is only available if your loan is held by a financial institution, not an individual. You must have Comprehensive coverage and insurance for your asset, as well.

Step 4

How much does it cost you?

You need to pay premiums for loan lease coverage. But the actual premium is specific for every product and is calculated after evaluating your asset on various parameters.

Step 5

Till when you need loan lease:

Loan lease coverage is valid for a certain time period. After that it is subjected to renewal every year. Upon lapse of the initial time period you will receive a notice annually informing you that you may no longer need the coverage and can drop the loan lease. However, it is up to you to decide whether you need to continue the premium or not.

Conclusion

Loan Lease gives you coverage beyond your asset’s actual value in cash.

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