Car Leasing Explained
Leasing is a long-term rental agreement that offers the exclusive use of a car or van for a specified period of time at a fixed monthly price. It offers an alternative, and often cheaper, financing solution to buying a new car or van with a bank loan or dealer financing, and quite often can get you deeper discounts on the vehicle than HP’s more traditional method .
Car leasing helps you avoid unexpected costs by offering a fixed monthly payment over the lease term. The customer also doesn’t have to worry about depreciation or selling the car, as this job falls to the leasing company.
Leasing a new car also offers an element of peace of mind, knowing that your car is less likely to develop a problem than if you were to buy a used car.
How car leasing works
The most efficient way to obtain a car lease is through a broker.
Many brokers have access to higher auto discounts and cheaper financing rates than other financing institutions.
At the beginning of a lease, the client pays an initial rent generally equal to three monthly payments, but this can be increased depending on your budget.
The customer then makes monthly payments over the life of the contract. At the end of the lease (usually two, three, or four years), the customer simply returns the car with no further obligations, or may choose to purchase the vehicle depending on the type of contract entered into.
Leasing a car is becoming increasingly popular with motorists in the UK due to the rising cost of ownership and the fact that more drivers like to trade in their car more often.
With the increasing use of the Internet among the population, more people are shopping online, and leasing a car is no different than buying a book from an online store.
There are plenty of car leasing websites out there, but be careful who you choose to deal with as many of them hide additional costs such as administration fees, reservation fees, and documentation fees.
When deciding on a lease, be sure to ask if there are any fees and charges other than the cost of the lease itself.
It’s also worth noting that underwriting criteria vary greatly between different types of funders and funding methods, so it’s always worth asking who you’re funding with and what the criteria are. This will save you some time when proposing your financing application after you have chosen your car.
If you are unsure about something, take the advice of someone who has rented a car before or ask the leasing company as many questions as you can.