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Free Car Leasing Guide

A growing number of our customers have asked us to compile a car leasing guide which would explain how car leasing and contract hire works. In specific we have been asked to explain the benefits and any potential disadvantages to car leasing, contract hire and lease cars. A growing number of you want to understand how to lease cars, what you should expect from a car leasing deal, any potential pitfalls to avoid when you lease a car and if there are any idiosyncrasies to be aware of when looking for a car lease uk. You have asked so allow us the Car Leasing Network, the home of car leasing, car, lease cars, car leasing uk and fantastic car leasing deals to respond: 

What is car leasing?

Car leasing is just one of the many various forms of vehicle finance.   

Before we delve any deeper into the subject however I think we should point out that car leasing is known by many different names. These names include: car leasing, contract hire, contract hire and leasing, vehicle lease, leasing vehicle, personal contract purchase, contract hire and personal contract hire.  

Think of car leasing as a long term rental: You "rent" the vehicle agree from a finance company, you keep it in a good condition, you keep to the terms of agreement between you and the finance company and come the end of the lease you simply hand the car back.   

How does car leasing work?:    

  • The car is leased to you by one of the UK's car leasing companies. During this leasing vehicle period, ownership of the leasing vehicle remains with the finance company.  
  • You agree to lease the car from the finance company for the agreed amount of money over a set period of time (typically 2-4 years).   
  • You agree to do a fixed amount of miles per annum (this varies but is typically between 10-30 000 miles per annum)  
  • You choose between a fully maintained car lease (all servicing and maintenance costs are covered) or a non maintained car leasing option (you are responsible for all maintenance and servicing costs)  
  • You agree to make the monthly payments on time.  
  • You agree to keep the leasing vehicle in a good condition (according to a "fair wear and tear" policy.)  
  • You return the leasing vehicle to the leasing company at the end of the lease and you start again!  

What are the advantages of car leasing?

  • You can generally afford a much better/more expensive car than you normally would as you are only financing the cost of the car now versus the residual value at the end of the contract.  
  • You have no acquisition or disposal hassles.   
  • You do not lose money through depreciation.   
  • You enjoy fixed cost motoring and easy budgeting.  
  • Car leasing can be a very cost effective means of funding when compared to the more traditional means of funding such as a bank loan. This is due to the fact that you are not funding the entire balance of the car and the rate of interest built into the finance will definitively be lower than the interest rate/APR your bank would charge you.  
  • You have a low initial capital outlay as the car lease industry standard is a deposit of three payments up front (e.g 3+23 or 3+35).   
  • You get to change your car every couple of years (or as long as the agreement states).  
  • Individuals benefit from significant discounts which traditionally have only been the domain of large companies with fleets of vehicles.  
  • Businesses who are making a taxable profit and who want an off balance sheet form of funding benefit from Contract Hire.   
  • Businesses who are vat qualified can claim back 50% of the vat on the rental and 100% of the vat on the maintenance element thus further reducing their costs.  

Are there any disadvantages to car leasing?

  • Car leasing does not offer you ownership of the vehicle. If ownership is important to you and/or suits your circumstances then car leasing is not for you.  
  • If the vehicle is used for business and/or is likely to incur significant damage during the period of the car lease then the cost to repair the vehicle on its return to the leasing company (i.e. the cost to return the vehicle to a condition "commensurate of age") might exceed the cost saving benefits of car leasing.  
  • If you exceed the agreed mileage you will have to pay an excess mileage charge. This excess charge varies according to the model of the car being leased, the car leasing company who the car is being leased through and the exact amount of excess mileage done (the charge works on a sliding scale which is made very clear in the finance agreement)    
  • Early termination fees will apply if you hand back the leasing vehicle before the end of the agreed car leasing period.   
  • Loss of control i.e. when you own the your vehicles you can do as you wish and sell them as and when you prefer.   

What length can you lease a car over?

  • Customers have the option to lease cars for two, three or even four years. Twelve and eighteen month contracts are also available however these can be costly.   

What can I expect when I come to the end of my car lease?

As part of the car leasing agreement (be this via contract hire or through personal car leasing) you must agree to keep the vehicle in a good condition and maintain it according to the manufacturer’s recommendations. Good condition or "fair wear and tear" is defined by one of the industries car leasing leaders and regulatory bodies. This guide is very prescriptive and even includes pictures to ensure objectivity is maintained. Call us and we will order one on your behalf. Once the car lease has ended an assessor will asses the car according to this guide and the finance company will ten bill you for any items or damage that are not considered "fair wear and tear"    

Who leases cars?

Both business and retail customers can and do lease cars.  

What types of cars can one lease? 

These days you can pretty much lease any make or model of car.  

Are there any types of leasing vehicles which are cheaper to lease.

Yes, there are advantages to leasing prestige cars such as Audi car leasing, BMW car leasing, Jaguar car leasing, Mercedes-Benz car leasing, SAAB car leasing and Porsche car leasing as these cars tend to have very good demand come the end of their lease and hence their residual values tend to be quiet strong.  

This makes the monthly payment more affordable and is the prime reason that a lot of prestige brand drivers, lease cars.  

With all of this in mind it is no wonder Contract Hire, car leasing and personal car leasing has become such a popular means of financing cars and vans. Lastly the best description of why you should consider leasing comes from J Paul Getty who said that "if it appreciates-buy it and if it depreciates lease it!!

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