Car sales are on the rise and have been for several years now, but in America one in four cars is owned through personal leasing and this trend is also on the rise here in the UK. But what exactly is car leasing and how does it work?
Obviously with the cost of mobile phone bills, gym membership and other things now being paid on a monthly basis by the so called “direct debit generation”, the purchase of cars is also becoming a month on month arrangement with finance options on the majority of cars.
Explaining car leasing
Personal Contract Hire (PCH) is where, instead of buying a car either outright or on finance, you rent a car for a long period of time, usually up to between 2-4 years. At the end of the period, instead of buying the car or owning it, you return it to the leaser.
When it comes to traditional ownership of a car, you have the risk of depreciation after a few years, meaning that when it comes to selling or part exchanging you are actually losing money on your car. With car leasing, you don’t have to worry about that because you simply hand the car back to the leaser and then you can either lease another car or you can go and buy a car.
Pros of car leasing
If you are looking for driving the newest model of a car, then leasing gives you that advantage to change your car more often and offers you Affordable monthly payments rather than having to save up to purchase a newer model. The deposits or down payments are very low or completely non-existent and the monthly payments are usually lower that loan or finance payments.
Now if you have bad credit, then leasing is easier to get than a finance option, meaning it can give you a chance to drive a reliable car without having to buy a used car that may be at risk of breaking down. You don’t have to worry about taxing your leased vehicle as this is down to the leaser as they are still the registered owner of the car, so that does save you money overall.
If you are looking for business car leasing, you can get a tax deduction for your business and you are leasing cars for your employees and business use.
Cons of car leasing
One of the main downsides of leasing depends entirely on your point of view. If you like to own things and you wish to ensure that your car is definitely ‘yours’ then leasing might not be for you. However as has already been said with the depreciation issue, why would you want to own something that is worth a fraction of what you originally paid for it when you can lease a car and not have to worry about that at all.
Car leasing can be cheap because it takes into account the mileage you do annually, however if you go over your agreed amount, then there is a charge per mile you go over the agreed annual amount. If you want to exchange your leased car in for a newer or different model earlier then you may have to pay more for ending your agreement early.
If you damage your leased car, there may be extra costs to you whereas if you own the car, it down to you whether you wish to fix the damage or live with it, but when it comes to a leased vehicle, you don’t have that option.
If you are looking to lease a car, there are great cheap car leasing deals available. If you have a car in mind that you want, then we can help you get a great car leasing deal and you can drive away with the car of your choice.