Leasing a car is a proven alternative to traditional financing and the outright purchase of a vehicle on the day you drive it away. With more and more UK drivers looking to make their budgets go further, it’s about time we took a closer look at how it works and why it can make all the difference.
In This Article:
What is a car lease?
Simply put, a car is a long-term loan from a company that owns the car for the whole time you are driving it. You agree to pay a fixed monthly amount for the duration of a lease agreement — typically 2-3 years — and then you hand the car back at the end of the agreement.
What are the advantages of leasing?
Being able to drive a brand-new car without having to pay the full price is one of the most attractive parts of leasing. Because your monthly payments only cover the depreciation of the vehicle, you often save considerably when compared to traditional financing. The other significant advantage is that you don’t have to worry about how you’re going to finance the purchase of your next vehicle. Because you simply hand it back to the leasing company at the end, you’re not left with a car whose value has dropped that you have to sell as part of funding your next purchase.
Setting the right budget
Setting a budget is all about figuring out how much you can afford for the initial upfront payment, plus what you can comfortably afford to pay on a monthly basis. In addition, you need to leave room in your budget to tax and insure the vehicle, run and maintain it, and also to have it booked in for regular services and your annual MOT. If in doubt, being conservative with your budget is always the best approach to take.
Choosing the right vehicle
You want a vehicle that is suitable for the task at hand, and only you will know what you feel comfortable driving. That said, it’s important to check the terms of any prospective agreement at the same time as taking the vehicle for a test drive. Noting the key terms and what they mean in terms of how you can use the vehicle is essential.
What are the key terms to understand?
If you take a look at fully transparent options, such as these Vantage Car Leasing deals, you’ll see that all of the key terms you need to understand are clearly laid out. In particular, you will need to pay attention to:
- Initial Payment: This is a non-refundable payment made upfront, and it is designed to reduce the size of your ongoing monthly costs
- Contract Length: Knowing how long you will have to make monthly payments, and how much they will be, is essential for your household budgeting
- Mileage Restrictions: All leasing agreements will have pre-agreement annual mileage limits, so make sure you understand the excess mileage charge
- Termination Fee: There will generally be a charge if you want to end the lease agreement before it is set to finish
You should also ask the leasing company to define fair wear and tear so that you can hand the vehicle back in what you know to be an acceptable condition. Many companies will also offer options to bundle in maintenance, servicing, and other extras that help you to budget for the overall cost of running your new vehicle.
Returning your lease car at the end of the agreement
On the agreed date, you will return the vehicle to the company, and they will inspect it for any damage that needs to be fixed. They will be thorough but fair, allowing you to see why any additional charges may have been raised. By choosing a company that you trust and that you feel gives you excellent customer service from beginning to end, you can make the process of returning the vehicle stress-free.
Is leasing right for me?
Good question. If you want flexibility, affordability, and the option to drive a new car that will have a highly predictable servicing and maintenance schedule, leasing is an attractive proposition. Taking your time to find a provider you feel offers value for money and the specific make and model of vehicle you want to be driving is the key. Don’t be afraid to ask simple questions to get yourself up to speed and to make sure that you get the right deal.
