Car Leasing and Contract Hire – Your Guide
Looking For Car Lease Deals?
Here’s everything you need to know before you commit
This section of The Used Car Guy is dedicated to finding the best cheap car leasing deals in today’s market. Whether you are searching for personal or business car leasing, you’ll be able to find a great deal on a huge selection of makes and models that are available through several UK car leasing companies.
Note: In the final section of this article you’ll find a list of the leading car leasing companies with a short description about each of them…But I do not provide comparison services for this type of product.
If you are seriously considering car leasing deals I strongly recommend that you read through this entire post. There are some things you’ll want to know before you sign on the dotted line…
If your goal is to get behind the wheel of one of the newest car models on the market without having to spend a ton of cash, contract hire car leasing may be just the way to do it. However, there are a number of options to choose from and a number of things to look out for in order to ensure you get the best deal for your needs.
For anyone who wants a bit more information on car leasing, the following guide is just for you. It looks at everything from pros and cons to options and pitfalls.
What is Car Leasing?
Similar to renting a flat or house, leasing a vehicle requires that you sign a contract and pay a monthly amount for a set period of time. When the contract is up, you can simply hand the keys back to the vehicle leasing company. Unlike car hire, where you rent a car for a couple of days or so, car leasing is long-term renting. In some cases, you may have the opportunity to buy the car in time.
The Benefits of Vehicle Leasing
First and foremost, you do not have to worry about a car losing its value – because you never own it. You also don’t have to worry about selling it when you are through with it. Simply give the keys back at the end of the contract.
Best of all, you can pretty much guarantee you will have a new model car every few years. This also means you will not have to worry about the car being out of warranty. In some instances, you will pay a little extra each month for maintenance costs. This way if any problems pop up, you won’t have to worry about finding the money to take care of it.
Obviously, the major downfall is you do not own the car when the agreement ends, unless you have an option to buy.
In addition, leasing often has mileage restrictions that will leave you paying an overage fee for any excessive miles.
This is very important to understand.
If you drive the car over the mileage limits you can expect to pay handsomely for each mile you clock up. In some cases you could be forking out an additional 10 or 20 pence per mile!
So, before you sign up for one of the car lease deals, take a little time and estimate how many miles you are likely to travel each year, and be realistic. Once you’ve worked out your average simply multiply that number by the length of the contract to see if you’re going to exceed the mileage allowance.
Example: 12,000 miles per year x 3 year contract = 36,000 miles
Your lease deal must allow you at least 36,000 over the term of the deal
There is plenty to think about in terms of leasing, so here’s a more detailed look.
How it works
You have the ability to choose between a wide range of manufacturers and models. The more expensive the car, the higher your monthly payments are likely be.
However, there are a couple of other factors that can affect your payment amount.
A car that holds its value better costs the dealer less over time, so they often cost less to lease. However, cars that lose value quickly tend to have the highest monthly fees so the dealer can recoup some of their loss.
So Volkswagen, Audi, BMW, Mercedes, Lexus types of vehicles can be the way to go.
Following this rule of thumb you’d want to avoid cars such as Kia, Suzuki, Hyundai etc.
The longer the length of the contract, the lower the monthly payment usually is.
The more miles a car has, the more its value drops. After agreeing upon a yearly mileage amount, the dealer will detail in your contract how much you will pay for each mile over the agreed upon amount – as we already know, this will be expensive.
If it’s to be included.
Payments are usually set via a Direct Debit mandate. If for some reason this is an unsuitable payment method for you make sure to mention it in advance.
At the start of the lease, you will have to pay a deposit that is often (but not always) equal to a couple of months’ worth of payments. In addition, many contracts include a clause that charges an additional fee should you try to end the lease before the agreed upon time.
This is another very important area for you to consider. I know of instances where a 12 month payment penalty was incurred for ending the car lease before the agreed time. So, if you think your personal circumstances may change across the duration of the contract, car leasing may be unsuitable for you.
Business Car Leasing
For businesses, leasing payments can be declared as tax-allowable expenses. VAT registered businesses may also reclaim 100% of the VAT if the vehicle is only used for business or 50% if it is also used as a private vehicle.
However, you will be charged for going over the agreed upon mileage, which means leasing a business vehicle may not be a good idea if you are constantly travelling.
What to Look Out For
A warranty on a new car usually lasts at least 3 years, so I’d say that paying for additional maintenance insurance to be a waste of money.
However, manufacturer’s warranties don’t include everything. In most cases wear and tear on batteries, tyres and exhausts aren’t covered, so be sure to look at what the maintenance payment will and will not cover.
Tip: Under most manufacturers guidelines a new car warranty is superb. Sure, tyres, brakes, exhaust and batteries may not be covered but these are general ‘wear and tear’ items. For example, a good set of front tyres should last you at least 20,000 miles, and rear tyres almost double that. A pair of front tyres will cost you about £100 fitted. That’s not so much to fork out on a wear and tear item.
Think about how many miles you’ll be travelling versus the proposed maintenance costs. Now you can work out which option is better for you.
Note: If you choose to make maintenance payments, check to see if you will be provided with a courtesy car should your lease car be in the workshop for any extended period of time.
Check on the penalties for missing a payment, as well as for ending the lease prior to the expiration of the contract.
Understand that this car doesn’t belong to you, so you will need fully comprehensive car insurance. Some deals include a fully comprehensive insurance package but many don’t include any kind of insurance.
Third party coverage only pays for damages to the other person’s property when a claim is filed. This will leave you to pay for the repairs if you try to hand back a damaged car when the lease expires.
Although premiums tend to be a tad more for a leased car than the premium on a car whose driver is the legal owner, you shouldn’t have trouble getting insurance for a leased vehicle. The difference in premiums is minimal, usually around £10-15 a year. In most cases, it is worth paying if you think leasing is a better option for you.
Now we’ve been through the pro’s and con’s let’s look at some reputable car leasing companies.
Car Lease UK
Offering both competitive personal and business car leasing contracts, Car Lease UK is one of the UK’s top car leasing suppliers. In the motor industry for more than 40 years, you be certain they will abide by the highest standards, and are also authorised and regulated by the Financial Conduct Authority.
Visit Car Lease UK Website
Offering bespoke car leasing agreements, Car4Leasing are independent leasing professionals who believe in helping you get the car you want at a price you can afford. Whether you desire to build a car from scratch or are searching for the best special offer, Car4Leasing offers excellent customer service and promises no hassle and no fuss. They are regulated by the Financial Conduct Authority.
Visit Car 4 Leasing Website
As the home of bad credit car leasing with no deposit on both personal and business vehicles, Hippo is one of very few companies that accept exchanges toward your new vehicle. With more than 4000+ online deals they can source any vehicle regardless of your budget and get it delivered to you within 10 days.
Visit Hippo Website
Lease 4 Less
Located in Eccles, Greater Manchester, Lease 4 Less offers commercial and personal car leasing contracts throughout the UK. Authorised and regulated by the Financial Conduct Authority, Lease 4 Less are known for a good customer service and after sales care.
Visit Lease 4 Less Website
With a wide range of vehicles to choose from, Lease Your Next Car refuses to be beaten on price. For details of their Price Match Promise, visit their website. Also FCA regulated and members of the BVRLA with a customer review score of 93%, as well as an “Excellent” rating on Trustpilot, they are your online car leasing specialists.
Visit LeaseYourNextCar.com Website
LVM Best Car Leasing Deals
LVM is proud to offer superior customer service, whether you are searching for one vehicle or an entire fleet. Authorised and regulated by the FCA, LVM is committed to helping you find the best car leasing deals currently available.
Visit LVM Website
Personal Car Leasing
With great deals on every make and model, Personal Car Leasing caters specifically to private individuals. Regulated by the FCA, all lease contracts include car delivery, as well as tax disc and manufacturer warranty. They have stock offers or can factory order based on your specific requirements.
Visit Personal Car Leasing Website
Since opening their doors in 1988, Plan Car has worked diligently to develop a reputation for superior service, integrity, honesty, and competitive pricing. Authorised and regulated by the Financial Conduct Authority, Plan Car LTD allows you to get instant leasing quotes online or you can use the showroom facility to save your favourite quotes, while comparing pricing, specs, and technical data.
Visit Plan Car Website
Offering thousands of leasing deals on both business and personal vehicles, Vertu is part of the Vertu Motors PLC Group, which has more than 100 dealerships across the nation. Regulated by the FCA, Vertu can get your next new car at the best available finance rates in the UK without charging any admin or delivery fees.
Visit Vertu Website
Whatever contract hire car leasing option you choose be sure to do your due diligence before committing yourself to a lengthy contract.
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The Used Car Guy