Leasing a car is a bit like renting a house. You will have full use of the car for the terms of the contract, but are not the legal owner. The most common contracts are between 2 and 4 years. You will make fixed payments on a monthly basis for the term of your contract. In addition, you will also need to pay an initial payment upfront. This is usually between 6 and 9 monthly payments. When your contract ends you give the car back. You can then look at getting a new car. It’s a really simple process.
In order to get a car you will need to use a broker or dealer. The first step is to decide on the car you would like. After that, we advise you to shop around to find the best price. Depending on the time of year, you may be able to get a really cheap price. Using a site like ours will help you find the best offers. Once you find a car you can place an order with the company. You’ll then need to go through a credit application. When you pass your credit check, they’ll place an order for you.
Would you get a mortgage for a house if the value went down by up to 40% after a year? That doesn’t sound great, does it? The moment you drive a car away after buying it, the value goes down. It then continues to go down the more miles you drive, and the older it gets. In addition, when you want to get a new car, you have the hassle of selling yours. Leasing is better – not only for your bank balance, but from a new car point of view. You get to drive a brand new car every 2, 3 or 4 years – with no hassle of selling it. It may also let you get your hands on a car you couldn’t afford to buy too. However, you will have to see past the fact that you don’t own the car.
9 = the amount of rentals you pay in advance aka the initial payment. 48 = the term of the contract (so 48 would be 4 years). 10k miles = the most miles you can drive in the car every year.
Before taking out a contract, it’s important to understand how the lease company works out your monthly payments. In order to do so, they work out the cars residual value (its value once your contract ends). They estimate the value by setting a limit on the mileage you can drive yearly.
Here’s how they work out your monthly payments:
1) They will deduct the future value of the vehicle from the retail price.
2) You will then pay the difference in fixed monthly payments.
1) Buying a new car is one of the worst investments you could ever make. When you buy a flat or house it gains value – making it a sound long term investment. But would you still buy a house if it lost value after buying it? Cars lose value the moment you drive them away from the dealer. They then continue to lose value and depreciate with the more miles you do, and the older the car gets. Most cars lose 40% to 60% value with 3 years. You avoid all of this with leasing.
2) If you like the idea of driving a new car, you can do so every 2, 3 or 4 years.
4) Are you someone who likes to budget? If the answer is yes, this is a great option for you. As well as being able to lease a car with set payments, you’ll not have to worry about interest charges.
4) No one likes the process of selling a car when they want a new one. It’s a pain. Leasing frees you from the process. Because you do not the car, you don’t have to worry about selling it. Simply get a new deal at the end of your contract and drive a brand new car.
5) Ever really wanted a car but it was out of your price range? This may be for you. There are always lots of good deals around with companies. This means you may be able to afford a a car that would be too expensive to buy. In addition, luxury cars tend to depreciate at a slower rate, meaning there are some really good offers.
6) Another benefit is that your car (in most cases) will be under warranty for your contract. If you buy a car on the second hand market, it will probably be out of warranty. The average warranty is normally 3 years or 60k miles (whatever comes first) and means you get piece of mind. Warranty covers issues such as steering, gearbox, electrics and more.
7) It’s a great way to save yourself some money. You only pay a low upfront initial payment (3-9 months). In addition, it’s typically cheaper monthly than taking out a loan.
8) Hate paying for road tax? Who doesn’t? What if we told you that road tax is free for the term of your lease contract?
1) Because you do not own the car you will not be able to take our third party insurance. You will need fully comp insurance.
2) As you have probably noticed, you will never be the full owner. It will only be in your control for the contract term and no more.
3) Leasing means policies and limits during your contract. You’ll have to stick to a set yearly mileage as well as agree to a fair wear & tear policy.
4) Unlike other finance methods, there is no option for you to buy the car at the end of the term.
5) Any changes to VAT rates will reflect in your monthly price.