Advantages of car leasing

* Collaborative post

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?