To avoid a huge upfront deposit, leasing might be a good option. Leasing deals are normally made for long term car agreements, where you need to pay low monthly payments. Once the period is over, you will have to give back the car. This is an ideal choice for those who cannot afford a luxury car. Do you want to know more about the car leasing and its benefits? Do you want to know how you can use the best model without spending much? If yes, then the article is written for you only. In this article, you will get all the required information about car leasing. Consider those, while choosing one for you.
Use this guide for your purpose. Any suggestion and recommendation will be appreciated. Let’s start with what is car leasing.
What is car leasing?
The same is applicable to the car leasing. You make a deposit, and the deposit needs to be equivalent to three to six months monthly payments of the car and make monthly payments. And when the lease period ends, the car goes back to the real owner.
Car leasing is popular in the US. In the USA, you will find more than a quarter of the cars are being leased. In the UK, you will find fewer examples of leased cars at less than five percent. But this trend changed after 2008 and is on the up. Now people are finding it as an easy option to drive the premium models with an affordable price realising they are only required to make low monthly payments.
How does it work?
A car leasing can last two to four years. The period of the leasing mostly depends on you. You will have to decide how long you want to use that car. The good thing about the car leasing is that, if you go for a short-term lease, you can choose another new car once the contract is over.
If you want to lease a car, first you need to decide what types of the car you want and what are the comforts and facilities you require. Hopefully, you have done the prior research about the budget such as how much you need to spend on a lease. You can check the budget of the leasing cars to know which one will suit you more. There is no point of planning to spend a huge amount if you are unable to afford it. The car lease starts from £99 for a month. Make your plans accordingly.
VAT is an important factor
As leases are primarily targeted at businesses. In many conditions, the final amount of the quote excludes the VAT. So, make sure that VAT is included in the quote. If not, then enquire how much you will have to pay for the VAT as that might hurt your budget. Calculate all the expenditure before making the deal to avoid any further confusion. In addition to that, you will have to pay the processing fee that will come in around £150-£200.
Before following all these, first, you need the finance approval for the lease. You will have to agree with the terms and the mileage limit. You should not lowball your mileage as any evasion will make you pay more. Once everything is done, the finance or dealership will do the delivery.
You might get the breakdown coverage and the road tax in a leased car, but it comes with an additional package. You will have to pay extra for this facility. It is not meant for everyone.
In brief, in a car leasing, you will not own the car ever, you will have a restricted mileage for every year, and you need to return the car in a good condition.
What will happen at the end of the lease?
Another option is that you can just hand over the car when the contract comes to an end. If the condition is good, and you have strictly followed the mileage limits, then you will have nothing to lose. Normally, the finance company does not charge anything for taking back the car. To make the process easier, you should contact the company a couple months before the end of the contract.
If you have exceeded the mileage limit, you will have to pay extra. They might ask you between 3p and 10p per mile. It will be much more when you lease a premium car model. Similarly, if the car is not in a good condition, you will have to pay the bills for that. You will have to make payments to correct the things.
Remember that a leased car cannot be sold as it is owned by a finance company. You will have the right to use it only.
Is a lease the right option for me?
That depends on your current financial condition and the purpose of use. Go through both the merits and demerits. If you find that both the positive and negative things can suit you well then go ahead with your decision. If you find them complicated and not suitable then consider other options.
Which one is cheaper: Buying or Leasing?
The good thing about car leasing is that you can get a car that you could not otherwise afford to buy. Another thing is that you will have to make low monthly payments. If you buy a car, you will have to invest more upfront. The advantage of buying a car is that you will be the real owner.
Many things should be factored into this decision such as the model of the car you want and the your budget you can afford. You will have to make the calculations properly to take the right decision.
For example, if you want a Vauxhall Corsa Hatchback car in a lease for three years, you will have to pay £1,908 for the deposit that will be followed by thirty-five monthly payments of £159. Just imagine how much you will be ended up paying until the end of the agreement. It will be around £7,470. And at the end of the lease, you will have to send it back to the finance company or carry out the same transaction – including a further deposit- to enter into a new agreement with a new leased vehicle.
With that amount of money, you can buy a small budget vehicle and you can use it for the lifetime. Moreover, you might be asked to spend more if the condition of the leased car is poor when you return it.
Usually, car leasing is made on the premium models as the payment is normally made on the cost of the depreciation. If you want to buy a high end model and are unable to afford it then leasing is the one option that can help you to drive that car for a year or two. Without leasing, you will not be able to use that car as it will never come within your budget. For example, if you want to lease SUV Volkswagen Touareg car for two years. You will have to pay £1,300 for the deposit and it will be followed twenty-three monthly deposits of £420. And the total expenditure will be around £11,000. With that amount, you might be able to buy a low budget car, but your dream to drive the SUV Volkswagen Touareg will never be fulfilled. Hence, leasing is the only way that can help you to drive most luxurious cars within a restricted budget.
Are extra there extra charges for servicing and maintenance?
Some finance companies include the maintenance and servicing cost of the car. In that case, you will only have to spend on monthly payments, fuel cost, and insurance. But most likely, you will be offered a non-inclusive maintenance package. Before signing the deal, you need to enquire about the maintenance and servicing cost. It might be cheaper than the offer given by the finance company. More importantly, a new car does not demand servicing and maintenance in the first year.
Who offers car lease deals?
You have two options. If any dealership offers the lease then contact them to get a quote to know how much they are charging for the upfront and what will be the monthly payments. However, before getting into details and signing the deal, you should check with the online brokers to find out which one is the cheaper.
Getting a car lease deal from an online broker. Make sure that your preferred service does consumer contracts as car leasing is mostly done by businesses. Online brokers will deal with the leasing company to buy the car for you. And it is their responsibility to hand over the car once you have gone through the credit check, signed the required documentation, and made the upfront payment. And you will have to hand over the car to them once the leasing period is over. Do you want to know some of the popular names of the online brokers? If yes, then consider the followings.
Car finance is offered by almost all the dealers of the UK. Dealership comes in three types franchised, car supermarkets, and independents.
In the franchised dealership, the finance deals are arranged by the car finance arm of a manufacturer. As a customer, you should not focus on who is offering you finance. Your focus should be on how to get the best deal. You need to inquire about the service costs, upfront spending, monthly payments and any other payment that you think needs attention. You can compare the price with the online broker. Choose the one that offers you the best deal.
Usually, car supermarket and the independent dealership get the finance from the big bank’s customer arms. The process is same as the first option. You just need to choose your car, get the finance, make the payment and wait for the delivery.
Car lease dealing is a competitive market. You will find a wide option for the car leasing in the UK. To get the best deal, you will have to first understand your requirements, your budget and then consult a dealer or online broker and choose the one who can help you with a cheaper deal.