What Is Car Leasing?
How Do You Define Car Leasing?
Car leasing is basically a longer-term alternative to the more traditional car rental. The mechanics are essentially the same, but people typically tend to lease cars for several years, rather than just a few days or a couple of weeks. Leases are usually offered by way of fixed term agreements, though can also take the form of rolling (month by month) contracts in some instances.
How Does Car Leasing Work?
Again, car leasing works in a similar manner to a traditional car rental. The customer pays the service provider to use the vehicle for a specific period of time after which it is returned. An initial deposit is usually payable at the beginning of the term, followed by a series of monthly payments.
Leasing costs are determined by multiple factors, including the type of vehicle, its value, the age of the driver and the length of the contract. When the term comes to an end, the driver customer returns the vehicle to the service provider, or may have the option of purchasing it by making an additional ‘balloon payment’.
Is Leasing A Car A Good Idea?
The benefits and general suitability of leasing vary from one individual to the next. Car ownership has its advantages, but also means coming up with the money to buy a car outright and cover all subsequent maintenance, servicing, repairs and so on. Leasing is popular among motorists who prefer the idea of fixed price motoring, along with those who want to drive a new car every 2 to 5 years.
Does Car Leasing Include Insurance?
Unfortunately, the vast majority of leasing deals do not include insurance. It is the responsibility of the customer to arrange their own fully comprehensive insurance, in accordance with the stated requirements of the service provider.
What Is Business Car Leasing?
Many service providers offer preferential services exclusively for business customers. This may include discounted monthly payments, bigger annual mileage restrictions and exclusive deals on multiple vehicles or fleet rentals. Due to the costs and complexities inherent with vehicle ownership, many businesses find leasing a far easier and more affordable solution.
Is Leasing A Car Better Than Buying?
Whether or not leasing a car is ‘better’ than buying a car is a question of personal preferences and priorities. On one hand, leasing means eliminating all repair, maintenance and service bills from the equation. It also means gaining access to the lowest possible monthly repayments and perhaps being able to drive a car you wouldn’t otherwise be able to afford.
However, some leasing deals make no allowance for the customer to take ownership of the car at the end of the term. Hence, leasing can rule out the prospect of owning your own car, making it a less desirable option for some.
How Does Personal Car Leasing Work?
Personal car leasing simply refers to car leasing deals available for everyday members of the public. Car leasing and personal contract purchase (PCP) deals are growing in popularity across the UK, as an affordable and accessible alternative to traditional car purchases.
What Are the Benefits of Leasing A Car?
Leasing a vehicle can be advantageous in many ways, including but not limited to the following:
- Much lower monthly repayments
- The opportunity to drive a better car than you could otherwise afford
- Nothing to pay for maintenance, servicing or repairs
- Upgrade to a new car every few years
- No risk of depreciation as you don’t own the car
- Comparatively low deposits and arrangement fees
- Flexible contracts to suit all budgets
Just a few of the upsides to leasing a car, which can be a surprisingly cost-effective option.
What Is Initial Rental In Car Leasing?
In leasing, initial rental simply refers to the initial deposit payable at the start of the term. As a general rule of thumb, paying a larger initial rental can (but doesn’t always) result in lower subsequent monthly repayments. Initial deposit requirements vary significantly from one service provider to the next, so it’s always worth comparing the market for a deal.