When it comes to personal car leasing, we commonly know it as having a vehicle which you make monthly payments on and do not have to worry about the resale value as you will most likely lease a new car in the future. But there is also another form of personal lease which commonly known as finance. It allows you to make monthly instalments on a vehicle with the option to buy the car after the monthly payments are up.
How does personal car leasing work?
Leasing a vehicle is, in essence, a long-term rental which will normally last over four to five years. You will pay a fixed monthly fee on a car for an agreed period of times and will also be restricted to a number of miles. Before you go to lease a car the company you are leasing it from will ensure you have a personal credit check to ensure you can afford the payments, which will also help if you have a good credit score as your interest rate will most likely be better.
It may sound a little silly, but when the leasing company does a credit score they do not check your other outings, so make sure you can actually afford the monthly instalments on the vehicle before signing away. Making sure your cost are within your budget are vital, this will also depend on the type of car you are looking to lease. We recommend taking a look at The Money Advice Service’s budget planner so you can see exactly where you are spending your money.
If you end up changing your mind about your leasing vehicle, for example, you want to pull out of your lease agreement a couple of months earlier then initially agreed you will incur a charge. You cannot simply walk away from the agreement. As we mentioned there might be a charge for leaving early, so make sure if you do wish to do this you read the fine print.
What restrictions are there when I lease a car?
There are a couple of restrictions you might face when it comes to leasing a vehicle. You will be able to find most of them in your leasing agreement, and if there are any you are unsure of, then you might want to contact the company you hold the lease agreement with.
You will not be able to modify the car, this means in any way at all. If you are wanting any modifications on the vehicle, it is best to contact the leasing company before you purchase the lease to see if they will do it for you. They might not, but sometimes it is worth a try. Alternatively, if you have already got the car, then you should also contact the company you are leasing the car from.
If you exceed the mileage then there are additional charges for this, so this may be something you need to look into when leasing a car. As an example, you may typically pay around 10p per extra mile which once you add it up can be a considerable amount. If you know you are going to go over the mileage, some companies allow you to pay for more miles in bulk.
When it comes to returning the vehicle you must return it in good condition; there should be a fair ‘wear and tear’ on your policy which will allow for things such as scratches. However, if you break the wing mirror or the windscreen wipers have been broken, you may face a charge for this kind of damage.
Don’t be surprised by many car leasing companies do not actually allow you to take the vehicle abroad, so if you are going for work or are looking to go on holiday, you may want to run this by your leasing company first. There may be a charge for going abroad, so, if you have anyone else in your family who has a vehicle you may want to use their car instead.
Benefits of leasing a car
In most cases, you can get a really good deal on your car lease, which often means you get a good price for the type of vehicle you want to get. There are plenty of car leasing companies out there so if you do your research you can get some of the best prices on the market as it is relatively competitive.
Leasing a car will often mean you are driving a better car then one you could probably afford if you were to buy it outright. It also means you might be able to change your car more regularly in comparison to if you owned your own car.
The car is more likely to be reliable and safe when it comes to leasing a car the vehicle you receive is usually brand new. When you lease the vehicle due to its newness if anything is to go wrong, then you can speak to the car manufacturer as it will usually be covered under warranty.
You don’t have to worry about the car depreciating as you will not have to sell it when it comes to the end of your lease agreement. If you are looking to buy a car that commonly depreciates over the years, then leasing is possibly your best option.
It can help cut costs when it comes to your car, as you will most likely not experience any. Cars are so new, they often do not need to be booked in for an MOT, however, if your lease agreement is over 3 years then you may need to book it into a trusted MOT testing centre.
Leasing a car
So, there you have it the benefits and reasons to lease a car over buying one potentially. If you are considering leasing a car, while you may be able to lease a vehicle that may have originally been out of your budget had you purchased it outright, you must ensure you can budget for the monthly payments.
Make sure you do your research when it comes to leasing a vehicle as the market is very competitive, take a look at Lease Comparison to find the best lease deal and price for you.