How to lease a car – an introduction to car leasing
How car leasing works
A lease is basically a long-term vehicle rental agreement, which offers exclusive use of a car for an agreed length of time (and mileage) at a fixed monthly rate. Car leasing is a cost-effective way of driving a brand new car without the hefty expenditure associated with purchasing.
The biggest cost of any new vehicle is depreciation. As the old saying goes, new cars start to decline in value the minute you drive them off the forecourt. And most will lose over half their value after the first three years of ownership. But with leasing, an allowance for depreciation is calculated into the monthly cost.
Of course the disadvantage of car leasing is that you don’t actually own the vehicle at the end of the lease period. However, once the lease period has lapsed, you do have the option to lease a brand-new car once again.
Car leasing explained
Leasing a car allows you to avoid any unforeseen expenditure with a set monthly payment schedule throughout the duration of the lease agreement.
In addition to this, you can apply an extra fee to the monthly bill in order to cover maintenance and servicing.
Vehicle leasing companies will ask for a non-refundable deposit – usually three monthly payments – at the beginning of the lease agreement. Then, once the lease period has lapsed (usually two, three or four years), you simply return the car. You don’t have to worry about the value of your vehicle decreasing because the job of selling the car falls upon the lease company.
With car leasing, monthly payments are often significantly lower than they are for buying car on finance, but the overall cost could be higher – particularly as you won’t profit from the sale of the car at the end of the agreement.
The cost of leasing compared with buying can vary massively depending on the make, model and version of your chosen vehicle. For example, a Ford Focus Estate 2.0 TDCi 140 Titanium 5dr depreciates quickly, retaining less than 40% of its initial value after three years, so this would definitely be cheaper to lease than buy.
It is also worth checking a vehicle depreciation calculator in order to see how much value fluctuation there is before making your decision.
Car Leasing Vs Purchasing
There are several advantages to leasing a car than buying:
- Fixed, low monthly rental rate.
- Low initial payment.
- No depreciation risks or disposal costs.
- Negotiable contract duration and mileage allowance.
- Optional maintenance packages.
- Road tax and breakdown recovery included.
Car leasing contracts
CVSL have a comprehensive range of lease contracts that can be tailored to suit every business/private individual. We have a range of finance package, so that you can choose the correct funding method to suite your company/personal requirements.
- Contract Hire
- Finance Lease
- Contract Purchase
- Hire Purchase
- Lease Purchase
- Outright Purchase
- Personal Contract Hire
- Personal Contract Purchase
Tips for leasing cars
For first-timers, leasing a car can be a minefield with a lot of fine print, which can include extensive terms and conditions.
With that in mind, we have produced a series of hints and tips to help you make the right decision.
- Study the payment schedule closely: – How much is the initial payment, how many monthly instalments do you make, is maintenance included? Lease contracts vary, so it is imperative that you understand all associated costs and know precisely how much you need to pay throughout the lease duration.