Why you shouldn’t be scared of leasing

When it comes to leasing a vehicle, there can be misconceptions that hold drivers back from taking out a contract. They might think there are hidden charges or large upfront payments, but leasing can often offer a range of benefits and cost savings.         

If you're hesitant about leasing, this useful guide covers some of the main questions about the leasing process and will help you discover why it could be a great solution for you.           

In this guide:     

• Is car leasing more expensive than buying?  
• What is depreciation?   
• Knowing your mileage limits  
• Returning your vehicle at the end of the contract  
• What if my financial circumstances change?  
• Drive better cars for less  

Is car leasing more expensive than buying?

There are some great cost benefits to leasing vs owning a car, such as lower upfront costs.  

• The amount you pay monthly is actually based on the depreciation of the vehicle over the duration of the lease and the rental of the vehicle. Therefore, you're never actually paying for the vehicle's full cost like you do when buying a car.  
  
  
• Buying a car usually requires a much higher initial down-payment than leasing a vehicle.   
  
  If you decide that you want to end your lease early by requesting an early settlement quote, you might incur penalties. This could be the remainder of the amount owed on the contract.    

However, some drivers do consider leasing to cost more than buying a car because you don’t ever own it outright and need to return it at the end of the contract, much like renting a home.   

What is depreciation?

Depreciation is the reason why your car loses value over time. It is the difference between the price you pay when you buy your car, and the price you would get today if you decided to sell it.    All cars depreciate at different rates. For example, Autocar revealed that Minis depreciate the least out of the UK's top 13 car brands. After nearly 35,000 miles on the road, a Mini loses an average of nearly 47% of its value, compared to a Toyota which loses nearly 75%. Note that this doesn't necessarily mean that a Mini is cheaper, because the actual value could depend on a number of circumstances and conditions. 

As you might expect, the cost of leasing depends on the type of vehicle that you choose. A vehicle that is more expensive and depreciates more in value across the duration of the lease, will cost more.  

Knowing your mileage limits 

Leasing contracts have set mileage agreements with excess mileage charges per mile if the driver goes over this agreement.   

However, this is not a hidden condition, so if you are aware of it when signing the lease agreement, it should not come as a surprise. Since the car is new, a driver should not have any problems keeping track of its mileage, with the odometer starting at a low value. 

If you think you might need more miles, then you can request a higher mileage limit at the beginning of the term. A simple calculation will show whether the cost of paying for a higher mileage allowance per month is worth paying out for and if you are unsure, you can ask our friendly team for advice.     

Returning your vehicle at the end of the contract

When you take out a contract for a lease vehicle, you agree to look after it and to return it at the end of the contract in a condition matching its age and mileage.  

The vehicle will be inspected for damage when you return it. Some wear and tear is permitted as you've been using the vehicle over a period of years, so there will likely be some marks and scuffs. However, if the car has damage or excessive wear and tear, you might incur a charge.       

What if my financial circumstances change?

When you sign a lease agreement for a vehicle, you are in a contract for the duration of the lease period.  

If you run into financial difficulties, talk to us as soon as possible. While you won't be able to just stop making payments and hand the car back, if you're open with us about your circumstances, there are usually helpful options we can explore with you. 

Our financial circumstances guide provides some useful advice about what to do if you find yourself with financial problems and where to look for help.   

Drive better cars for less

Leasing is an affordable way to drive a new vehicle without the ties of owning it outright. It provides several benefits, including lower monthly payments and upfront costs, the ability to drive the latest models and no need to worry about the depreciation of your vehicle.     

Leasing can also be an effective method of decreasing your monthly outgoings:  

• Lower monthly costs than other types of car finance 
• A manufacturer warranty that is likely to cover the full term of your lease 
• No MOT needed for up to 3 years 
• Opt for a maintenance and servicing package to eliminate unforeseen mechanical and performance issues caused by wear and tear that could leave you seriously out of pocket 
• Decide how long you want the contract to last 
• Choose how much, if anything, you want to pay as an initial rental  

Leasing is a great option for drivers who want the flexibility and reliability of always driving a brand-new vehicle, whilst fitting around their monthly budget.    

Speak to our friendly team today if you’d like to find out more information about the leasing process or the options available by calling us on 03447451818 or messaging us online.