Many people are still undecided when it comes to car leasing. Whether it be personal or business lease, the people involved are unsure of the benefits of paying to essentially ‘rent’ a vehicle.
There are now more companies offering car leasing than ever before and this has given customers the opportunity to explore what has become common practise for the savvy drivers and financially cautious.
Car leasing is essentially long term vehicle rental which gives you the exclusive use of a vehicle for a period of time, usually over 36 months, at a fixed price. The concept was huge in the US before it finally caught on in the UK.
Opting to lease can and one of the biggest positives comes under depreciation. Famously they say that a brand new vehicle loses thousands off the value as soon as it is driven off the forecourt. You are then looking at a higher monthly payment to keep up repayments for the agreed term of say 60 months and then you have the final sale value which may cover the interest you have had to pay over the term. Once you work out how much you have paid for the vehicle plus the interest on the vehicle with the final value against it, you are likely to make little to no financial gain.
With personal car leasing you can opt to pay no initial payment up front and increase your monthly payments slightly to remove the need for a deposit. Your monthly payments are also likely to be much lower on a vehicle lease than a straight purchase so chances are for your budget you can get a much better specification of vehicle or better model than you originally anticipated.
Another norm for those in the new car market is the initial deposit request. With leasing you could be looking at anything from on a no deposit lease up to £500 or £600 whereas a new car could be a few thousand.
When you opt to buy a new car you are likely to be stuck with that vehicle for the next 5 years until your finance is completely paid off. If you opt to change your vehicle during your finance agreement you will struggle to sell on your vehicle. With the emphasis on HPI checks nowadays car buyers are much wiser to people passing on cars with outstanding finance and other issues. If you want to sell a car you are buying from new you will need to settle the finance or part exchange your vehicle for a somewhat deflated figure on its actual value.
Car leasing allows you to change your vehicle after around 2-3 years depending on your lease agreement terms. That is the usual amount of time before a driver gets ready to change their vehicle and makes for convenient and easy upgrades.
A lease dealership also has access to a lot of lenders who are willing to look at accepting deals from people who may have had bad credit in the past. A lot of the main dealerships only really deal with people who have fantastic credit and this can be off putting and can kill off a deal with some people who have missed payments or more serious issues.
Overall you could be saving yourself a small fortune when it comes to car leasing as well as saving yourself the hassle of the resale of a vehicle if you chose an outright purchase on a new or used vehicle.