Personal car leasing is driving continued growth in the UK motoring industry, keeping new car registrations at an all-time high. This trend is set to continue and so it’s no surprise that many drivers are looking to lease a car for the first time.
However it’s not as straightforward as buying a car on finance (hire purchase), which is why you should familiarise yourself with the specifics of car leasing contracts.
The first thing to know is that the first month’s lease instalment you make will likely be higher than the ongoing payments. This is something which catches out many drivers who have never leased before. The amount you pay over the course of a contract will be more or less the same, but the way it’s divided up depends on how the dealer/broker advertises it.
For example take a look at way these headline car leasing offers are advertised. As standard, each car lease deal is structured with 6x the regular payment due in the first month. This is fairly standard across the leasing industry, although some brokers will advertise with 9 or 12 times the regular rental up-front in order to create a more appealing headline price. So read the specifics before being drawn in with a super low monthly rental figure.
Maintenance and Servicing
There are two options for maintenance and servicing when taking out a car lease. One is ‘funder maintained’ and the other is ‘driver maintained’. Funder maintained costs more, but it means that and servicing and routine repairs are covered within the cost of your monthly payment. Driver maintained is the opposite, where you are solely responsible for keeping the car serviced at regular intervals and financing any repairs or issues during the contract.
The option you choose depends on your budget and the amount of miles you’re likely to drive. On lower mileage contracts the scope for things to go wrong is less, so maintenance is less critical. However if you’re driving higher mileages it’s a sensible option to go for.
Wear and Tear
Something a lot of people are concerned about when taking out a car lease deal is the amount of wear and tear they’re allowed. Thankfully in the UK all good brokers are part of an organisation called the BVRLA. This umbrella organisation sets out a specific guide for lease car wear and tear which protects consumers.
So as long as the company you lease from is a member of this organisation there is no risk of being unfairly charged for minor wear at the end of your lease.
Returning the car
At the end of your contract the finance company you are leasing through will arrange collection of your vehicle. They will come to your home or work address and quickly inspect the car. You will be asked to sign an account agreeing with the observations they have made or contesting them. Then it’s time to lease another car or find a vehicle via an alternative method.