Leasing a car: How the agreement works

28/01/2022

Leasing a car: How the agreement works

Growing numbers of us are leasing a car and lots of people who are considering vehicle leasing might be wondering how the contract hire agreement works.

There are various reasons why car leasing is growing in popularity, but the flexible payment options are very attractive.

Essentially, when leasing a car, you are effectively renting it.

This period is determined before you sign the contract, and, for example, with Tilsun Leasing can be two, three or four years.

You will pay your car lease agreement in monthly instalments that consider the vehicle's depreciation.

You will be responsible for the insurance and maintenance of the car, unless you sign up for a maintenance package which means that all the servicing and maintenance is taken care of, and this usually includes the tyres and exhaust system.

 

Initial rental amount explained

Most car leasing firms will ask for an initial rental amount and this is effectively the monthly payment that you will be signing up to.

However, you could pay a different amount to help lower the monthly payment.

With Tilsun Leasing, you can pay the initial rental amount as either one, three, six or nine months of the equivalent monthly payment.

For many people, the amount they select will be much lower than the amount they will need to pay as a deposit on a new car.

It's important to appreciate that this monthly amount that you pay will remain fixed throughout the contract hire agreement.

Your car lease deal will also include the road tax, if your car is subject to it, but you will need to insure and maintain your vehicle otherwise.

Your car lease contract explained

When you sign your car lease contract, you agree to pay a monthly amount for the agreed period.

When the agreement comes to an end, you can either switch to a new car or start a new contract hire agreement.

Or you may decide not to lease a car and you will simply hand your vehicle back to the car leasing company.

Should you decide to start a new contract hire agreement, you will need to decide how long that agreement will run for, how much the initial rental payment will be and how many miles you will travel every year.

 

Your car leasing agreement miles

When you lease a car, you don't have to worry about its depreciation, but you will have to look after the car, so you won't get handed an excess mileage charge for the extra miles that you travel.

For this reason, it's important that you work out carefully how many miles a year you will travel because this will have an impact on the monthly payment.

If, for example, in the first year you find that you are travelling more miles than you estimated, you can contact the car leasing company to explain and have the monthly payment reassessed.

This is probably a cheaper option than driving the extra miles in the hope that the car leasing company won't notice. They will notice and they will send you the bill to cover the extra miles.

It's also worth appreciating that the miles that you agree to drive every year are only important when you hand the car back so you could drive fewer miles in the final year of the agreement to ensure that you finish at the agreed amount.

Leasing a car

There's no doubt that leasing a car is growing in popularity with UK drivers because they can usually get behind the wheel of a brand-new car for less than it would cost to buy it.

Under the agreement, the driver does not own the car and they will still need to look after it to avoid any serious wear and tear because any damage must be repaired before handing the car back, or the car leasing company will hand you a bill for those repairs to be carried out.

Leasing a car is a flexible undertaking and the agreement reflects this because you get to decide the make and model of the car you would like, how long you want it for and how many miles a year you will travel.

The annual mileage agreement can alter between car leasing firms, but with Tilsun Leasing you can choose a range of mileage figures from 5,000 miles to 30,000 miles.

 

Leasing a car: Your car leasing agreement

If you have any questions about leasing a car and the agreement, or the type and style of car you can sign up for with a contract hire deal, then it's time to speak with the Tilsun Leasing team on 03330 040 888.

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