Companies in the UK have been leasing brand new cars for many years. While the rest of us were taking out expensive bank loans or saving up to buy new cars, businesses leased them. It made perfect sense: they could drive brand-new cars without shelling out a lump sum of tens of thousands of pounds.
But today leasing is no longer only for companies. Recently personal leasing has become more popular – the latest industry statistics say over 1.6 million people now lease a car in the United Kingdom.
Car leasing is similar to renting, in that you choose a vehicle, for an agreed length of time (usually between two and five years), for a set fee. You have complete freedom of choice over your vehicle’s make, model and specifications (colour, trim, etc.) and your contract is tailored specifically to you in terms of the estimated annual mileage, the length of contract and how you’d like your payments to be structured.
The total cost of your lease is calculated based on several factors: the value of the car (undriven), the cars estimated value at the end of the lease (the residual value), your annual mileage allowance and the length of your lease.
You put down a deposit, (initial payment). This is usually equivalent to 1- 12 monthly instalments, but can be a fixed amount. This is then followed by fixed monthly payments that continue until the end of the contract. In general, the longer the period, the lower the monthly payments. You pre-define the mileage you’re going to cover, calculated quite easily by looking over a few of your more recent service reports.
At the end of the lease, the vehicle is collected, checked over, and your payments then cease, leaving you free to lease another car. If you exceed the agreed mileage, it’s not the end of the world, there’s typically a straightforward pence per mile calculation that you pay on returning the car.
One of the main benefits of having a lease car is that various elements of car ‘ownership’ are brought together for the customer in one simple package. For example, Road Tax, breakdown cover and car warranties are included, and service and maintenance packages can also easily be made part of the contract.
After years of standing in the shadow of the Personal Contract Purchase (PCP), car leasing is becoming increasingly popular.
But how exactly does leasing differ from a PCP?
Unlike PCP, there’s no interest charge on your payments, you are simply just paying the depreciation on the car. And at the end of the term there’s no haggling at the dealership over the final vs. estimated value of the vehicle, having to negotiate a part exchange with the dealership on your next vehicle or buying the car outright.
Leasing companies operate as independent vehicle brokers, putting together highly competitive car leasing deals. Unlike manufacturer dealerships, Car Cloud Leasing is independent. We work closely with manufacturers, large motor groups and most prominent finance companies to get some of the best deals on all leading car and van makes and models. Customers benefit from the strongest discount terms, providing them with a very competitive financial solution. Furthermore, rather than having to go to the dealership, customers can do this on our website from the comfort of their own home, then speak to one of our impartial consultants to make the most informed decision on their next new car.”
Ultimately, it gives the customer more choice, as they are not tied to a specific manufacturer or dealership. At the end of the lease, it is hassle free, as the vehicle is collected, and you are free to choose your next new vehicle.
The most recent figures from the British Vehicle Rental and Leasing Association back up the rise of leasing. The number of personal contract hire leases increased year on year by 28 per cent in the third quarter of 2017*. That’s hardly surprising when its benefits are so strong.
*BVRLA Q3 2017 Quarterly Leasing Survey
"What I liked most was the complete removal of the hassle involved in finding a car and getting rid of the old one. I am very pleased with the outcome and was very impressed with the whole process."
Rev. Ken MacDonald, Bearsden, nr. Glasgow