How does car leasing work?
On the face of it, car leasing and personal contract purchase (PCP) – another popular form of car finance – are similar. Both involve a deposit and making regular monthly payments.
Buying a car with a PCP is usually more expensive than a equivalent car leasing, because you’re paying off the value of the car and paying a fee to the finance company.
Car leasing also known as personal contract hire, car leasing is one of the most affordable and hassle-free ways to access a new car. You have to pay a deposit, followed by regular monthly payments for a set period of time – often two or three years – but car leasing generally lower than other car finance.
The big difference between car leasing and other types of finance is that you are effectively renting the car and you do not own it after you’ve finished making the payments.The terms and conditions of any car finance should be made very clear before you sign the contract, and car leasing is no different.There is usually a pre-annual agreed mileage limit, for example, 10,000 miles.
When you’re leasing a car, you simply hand it back at the end of the contract or arrange another lease. It may also be possible to extend the contract and hang onto the existing car for longer, but you’ll have to arrange that with the finance company.
If you exceed that then you’ll have to pay extra money at the end of the contract.The majority of car leasing contracts do not include maintenance, though there may be an option to add it to the monthly payments. Unless you specify it, you will be responsible for servicing the car, but it may also be possible to buy a manufacturer’s service pack that does the same job.You’ll also need to make sure the car is in good condition before you hand it back at the end of the contract. If it’s damaged, then the finance company will expect you to cover the cost of repairs.
The best way to get a great deal when leasing a car is to check out What Car?’s personal lease special offers. We keep track of the top personal contract hire offers from franchised dealerships around the UK to bring you the most competitive deals in the market.You can search by business or personal lease contracts, annual mileage, payments and length of contracts or by the specific type of car you want.