Car Leasing Explained
Leasing is a long-term rental agreement offering the exclusive use of a car or van for a set period of time at a fixed monthly price. It offers an alternative, and often cheaper funding solution to buying a new car or van with a bank loan or dealer finance and quite often you are able to obtain bigger discounts on the vehicle than the more traditional method of HP.
Car leasing helps you avoid any unexpected costs by offering a fixed monthly payment for the term of the lease. The customer also doesn’t have to worry about depreciation or selling the car as this job falls to the lease company.
Leasing a new car also offers an element of peace of mind, in knowing that your car is less likely to develop any problems than if you were to purchase a used car.
How Car Leasing Works
The most effective way of obtaining a car lease is to go through a broker.
Many brokers have access to bigger discounts on the car and cheaper finance rates than other funding institutions.
At the start of a leasing contract, the customer pays an initial rental usually equivalent to three monthly payments but this can be increased depending on your budget.
The customer then makes monthly payments for the duration of the contract term. At the end of the lease contract (typically two, three years or four years), the customer simply hands the car back without any further obligations, or may choose to purchase the vehicle depending on the type of contract taken.
Leasing a car is becoming more and more popular with motorists in the UK due to the cost of ownership increasing and the fact that more drivers like to change there car more often.
With the increasing use of the internet amongst the population more people are buying on line, and leasing a car is no different to buying a book from an online shop.
There are many car leasing websites out there, but do be careful who you choose to deal with as a lot of them do hide extra costs such as administration fees, booking fees and documentation fees.
When deciding on a lease make sure you ask if there are any other fees and charges over and above the cost of the lease itself.
It is also worth noting that the underwriting criteria varies greatly across the different types of funders and funding methods, so its always worth asking who the finance will be with and what is there criteria. This will save you some time when it comes to proposing your finance application after you have chosen your car.
If in doubt on anything at all, take some advice from someone who has leased a car before or ask as many questions as you can to the leasing company