Should I lease?

Is car leasing for me?

Car leasing, if your reading this, you've probably heard all about it. But how does it work? This article looks at the ins and outs to better understand what you can expect.

What is a car lease?


Leasing (or contract hire, same thing) is like hiring a car. Except for longer, like between two to five years. You never own the vehicle; you're just paying for the use of it and are contracted for mileage.

How does leasing work?


The total cost of the lease is fixed. It varies on the mileage you choose and the term you lease the car for; more on this later. Once you've picked those parameters, the total cost won't change. You can decide how much you would like to pay upfront, known as your 'initial rental'. It is usually three, six, nine or twelve times your monthly rental. So if your monthly rental is £200 and you choose to pay three times your monthly, your initial rental will be £600. If this was a two-year lease, this would be called a 3+23m profile. £600, followed by 23 monthly rentals of £200.

Should I pay more?


That's totally down to you. It works like a see-saw. The more you put in initially, the smaller the monthly rental, and vice versa. It depends on your financial situation, and remember the total doesn't change, just the way you pay it. We can talk you through what's best for you.

Mileage charges?


There are excess mileage charges, so it's essential to get your contract's mileage accurate from the outset. Try and get a true reflection of what you are likely to need daily and over a whole year. It's worth bearing in mind that with lockdown restrictions easing, you may need to nip back to the office or go further afield at the weekends too.

What about my new car?


Once all the tedious paperwork stuff is out the way, your new car can be delivered! You'll need to make sure that you are happy with it and sign to say that you're delighted with your new vehicle. We usually drop it off at home or at work. When the lease is finished, you let the lender know that you are ready to have the car picked up. Although we will be in contact in good time to remind you about this. You might want to have any damage, over and above wear and tear, sorted out before it goes back, as the lender will charge you for this.

Who owns the car?


The leasing company own it. You're effectively renting it and won't receive the logbook. You hand it back at the end with no option to purchase it. This isn't to say that you can't ask the lender for a purchase price; some leasing companies will give you a figure to take it off their hands at the end. Talk with one of our leasing specialists, and we can guide you on who is likely to offer this.

Who looks after the car?


You can choose to have maintenance included for an extra cost. This would consist of servicing, wear and tear items and even tyres. This is great for budgeting and proper hassle-free motoring. If you choose not to have a maintenance package included, you would be responsible for all that. Although you will have a warranty should there be any electrical or mechanical faults.

Who pays for road tax?


The road tax (or road fund license) is included with a car lease for the term.

What about car insurance?


Once you know the car is coming, you need to get it insured. We will supply the vehicle registration number and let you know when you can expect it.

What are the benefits of car leasing?


Car leasing gives you a lower initial rental, low monthly rentals, and cars come fully taxed for the lease, plus the vehicle will come with a manufacturer's warranty. You can even choose maintenance for extra peace of mind. Then there is the fact that you pass the depreciation risk over to the lender and that you can get a new car every few years.

And what are the cons?

You will never own the car. You need to keep an eye on the mileage as there are excess mileage charges, plus you would need an early termination quote to leave the contract.

Car leasing guide