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If
you are looking at getting a new car but can’t afford to purchase a
vehicle outright or are fed up with having an older car that requires
lots of mechanical repairs then perhaps leasing a car is the perfect
option for you.
What
is car leasing?
Put
simply leasing a car is a long term rental. When leasing a car you
pay a fixed monthly fee to use the car for an agreed amount of time
and number of miles.
Different
types of car leasing
There
are two common ways of leasing a car -
Personal
contract purchase (PCP) where you pay monthly payments to lease the
car with the option of buying the car in the future.
Personal
contract hire (PCH) where you pay monthly payments for the time of
the lease agreement to use the car and then give the car back at the
end of the lease.
Car
leasing facts
* To
secure a car lease a credit check is compulsory
* Car
leasing credit checks won’t assess outgoing or ability to afford
monthly repayments so those considering have to ensure they can
afford repayments
* Lease
agreements can last between 2 to 5 years
* A
deposit (often three months lease) is required to be paid upfront
* During
the lease agreement you never own the vehicle
* At
the end of lease agreement term you have to hand the car back unless
you signed up to a personal contract purchase rather than a personal
contract hire and opt to buy the car
* Some
car lease agreements come with a maintenance package that covers
things such as annual car tax
* If
you want to hire a car long term and don’t want to buy it in the
future often the cheapest car leasing option would be to sign up to a
personal contract hire agreement
* With
a lease car you only pay the car’s depreciation for the lease
period rather than the value of the car
Advantages
of car leasing
* Drive
a new car - as leased cars are new cars leasing is a brilliant way to
drive a brand new car and upgrade to a new model every few years. For
example you could lease a new Audi on a 2 year lease agreement and
then at the end of the term lease a newer model
* Drive
a car you couldn’t afford to purchase - monthly payments for
leasing a car are often lower compared to other forms of finance for
purchasing a car, so leasing a better make, model or car with
optional extras can be more affordable than buying the same car.
Likewise car leasing with monthly payments gives drivers the ability
to drive a car that might be out of their price range if they were to
buy it outright
* Experience
the latest car technology and safety features - as leased cars are
new you can benefit from the fuel economy, latest in-car-technology,
performance advancements and safety features found on newer cars
* Reliability
- as leased cars are new they are commonly more reliable and less
likely to break down especially compared to older cars. Also as the
car manufacturer warranty usually covers the period the lease
agreement if something does go wrong with the car it will often be
covered by the warranty
* Cut
out big car maintenance costs - whilst you may not be free from all
car maintenance costs as the car is new and you will only be driving
it for a set period of 2-5 years you are unlikely to have to deal
with costly repairs and maintenance such as timing belts and fuel
filter changes. Also as cars do not have to have an annual MOT test
until the third anniversary of registration you may have already
ended the lease agreement and will have avoided the hassle and cost
of an MOT
* Avoid
depreciation - as the billionaire oil tycoon J.Paul Getty says - “if
it appreciates, buy it. If it depreciates, lease it”. As cars start
losing value from the moment you drive it away from the dealership if
you lease it rather than purchase it you avoid depreciation
Have
you ever leased a car?
My husband has been looking into car leasing for his new job there are definitely advantages to leasing than buying
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