Is leasing a car a good idea?

10/06/2021

Is leasing a car a good idea?

The prospect of a cheap car leasing deal with low monthly payments may have caught your eye, and you are asking, ‘Is leasing a car a good idea?’.

This handy guide will explain more about car leasing, how leases work and whether a contract hire agreement will fit into your lifestyle.

The basics of car leasing explained

While leasing a brand-new car can be a cheap undertaking, you will never own the car.

Instead, the finance company will retain ownership and there's no prospect of you buying the car when the agreement ends.

Essentially, you should see car leasing as being a long-term rental over an agreed period of time.

You can lease a car with Tilsun Leasing for two years, three years or four years.

The monthly payment is affected by a number of factors, including the car's depreciation. That's the amount it will losing value while you drive it.

Add in the number of miles, and the payment is calculated.

This means that the cheap car leasing deal is possible because when you lease a car, you are not paying the full purchase price and are instead paying to use the vehicle.

Should I buy or lease a car?

Depending on your circumstances, or whether you are looking for a business car lease, leasing a vehicle can make more sense than buying a car outright.

One of the most important issues is your annual mileage.

For example, car leasing experts calculate that if you cover travel fewer than 15,000 miles every year, then leasing will probably be the better option.

And since cars will lose value with the higher mileage, leasing takes this into account.

Also, leasing may give you access to a brand-new car with the latest safety equipment and a higher specification than you could otherwise afford if buying outright.

This issue may be important if you need a reliable car for everyday use, particularly commuting to work.

Older cars become less reliable but with a brand-new vehicle, you get peace of mind because they offer reliability and the manufacturer’s warranty is still valid.

You can also trade-in for a new car every two, three or four years.

Car leasing advantages

One good advantage to leasing a car is that you will be able to budget effectively with a fixed monthly payment.

You also do not need to have the money available to buy a car outright, and instead enjoy low payments.

Indeed, if you are using finance to buy a car, you could be looking at a loan that could run longer than a leasing agreement during which time, newer models will appear with better technology and safety kit.

For example, in recent years, popular safety features such as autonomous emergency braking which will help prevent your lease car from being in an accident have grown hugely in popularity. There's even night vision facilities in some cars to detect objects including pedestrians and cyclists, in your path when driving at night.

The other big advantage when leasing a car is that you don't have to worry about selling it.

That means you don't have to take the time and trouble of advertising your car for sale privately or try for a decent price with a dealership.

Another advantage is that you will still enjoy the manufacturer’s warranty, which is usually up to three years, so all electrical and mechanical faults will be repaired.

Don't forget too that you can switch easily to an electric vehicle for leasing purposes to do your bit for the environment and enjoy very low running costs.

There's also the prospect of not having to trawl various car dealerships in a bid to find the best deal or price since the UK's car leasing sector is competitive and it is easy to find great contract hire deals.

Car leasing disadvantages

While there are many great reasons to lease a car, there are some disadvantages to consider.

For example, if you drive lots of miles, it may be more cost-effective for you to buy the car outright.

That's because if you go over an agreed mileage limit when leasing a car, you will need to pay excess mileage charges.

There's also the issue of fair wear and tear and any serious damage will need to be paid for.

Essentially, the leasing company will appreciate that dings and scratches will be a normal part of driving a car in the UK - but you should check the leasing fine print to determine what fair wear and tear will look like and how much you may have to pay.

Who owns a leased car?

To put it simply, whoever is leasing the car will not own it, and they won't get the option to buy it when the agreement ends either.

The finance company will retain ownership of the vehicle and when the agreement ends, they will then sell it on.

However, even though you will not own the car, you will need to insure it for everyday use.

Other issues include not worrying about the MOT because this usually becomes due on the car's third birthday - and you will have probably handed the car back.

Also, the road tax is included in your monthly payments.

What happens when a lease ends?

There's a very simple procedure when a car lease comes to an end, you simply hand the vehicle back decide whether you want to lease a new one.

Someone will come to your home or place of work to check the car is in good condition, whether there's an excess mileage charge to levy or whether there is any damage to pay for.

It's also important not to confuse a leasing agreement with a PCP agreement which means there's a balloon payment at the end of the term. Apart from paying a fixed monthly amount, there is no balloon payment, or outstanding amount of money to repay when you lease a car.

One of the issues with a PCP agreement is facing the prospect of the estimated value of the vehicle not matching the final estimate which means you may end up spending more on the balloon payment than you anticipate.

When a leasing agreement ends, you can either sign up for a new car with the same leasing company or shop around to enjoy the best cheap car leasing rates - this is a competitive market and brokers are reviewing constantly what the competition is offering.

Who can I speak to about leasing a car?

Want to lease a car? You can speak with the experts at Tilsun Leasing on 03330 040 888.

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