Personal leasing is one of the most popular ways to finance the purchase of a new car in the UK, it enables you to drive away a shiny new vehicle, often with low monthly repayments and without the risk of depreciation.
You might not immediately be sold on the idea, but given the fact that leasing companies are able to lease you a factory fresh Volkswagen UP for as little as £93.16 a month, it’s worth a consideration, right?
Essentially a personal lease is a long term rental agreement with a pre agreed annual mileage, lease duration and a schedule of monthly payments that can be calculated with or without maintenance costs included.
So, I’m almost sold, but what are the benefits of leasing?
Beat depreciation – Some new cars can loose £1000s to depreciation in their first year alone. However, with personal leasing you only pay for your use of the vehicle and you’ll never actually own it so technically you’re avoiding the risk of depreciation, instead leaving this firmly on the shoulders of the car leasing company.
Build your own car – Well not literally, but leasing does allow you to select your own level of trim and specification along with any optional extras you wish to include from the manufacturer brochure.
One single monthly payment – Most personal leasing companies give you the option to add a maintenance package and to combine it with the cost of the car in order to benefit from a single monthly payment. This can include things such as replacement tyres, servicing and roadside assistance.
Some restrictions worth considering
Cancelation fees – If you choose to return your car and exit the lease early, there may be an early termination fee and you could even be liable to pay for the remainder of the leasing term that you originally signed up for.
No modifications – Because a lease car is like a long term rental, you’ll never actually own the vehicle and are therefore prevented from making any modifications to the vehicle. That said, for modifications such as tow bars you can usually arrange with the leasing company to have one fitted prior to taking delivery of the vehicle.
Mileage cap – All personal leasing plans come with a pre agreed mileage, exceed this and you’ll likely have to pay a penalty at the end of the agreement.
Vehicle condition – Although you’ll never actually legally own the vehicle it is your responsibility to ensure that the car you have on lease is properly maintained and generally kept in good condition. Upon returning the vehicle at the end of your lease agreement, any damage other than general wear and tear will likely have to be paid for
So, what are the alternatives?
Cash purchase – Okay, so paying cash is probably always going to be the best option when it come to buying a car, unfortunately we don’t all have a sufficient bank balance and may have to consider other options.
Short term car rental – Depending on how often you’ll actually be using the car and whether or not your circumstances are likely to drastically change over the coming months, it may be a viable option to simply hire a car for a day or a couple of days as and when you need one.
Other types of finance – Aside from personal leasing, the options available to finance the purchase of a new car are plentiful. There’s high street banks and their offering of personal loans, though these are often only available to existing customers with exemplary credit ratings.
If your credit score is not great, you might need to get in touch with a bad credit car finance specialist.
In addition, many car dealerships now have their own in-house brokerages and offer a range of finance options with personal contract plan (PCP) being one of the most popular.