Leasing cars is becoming increasingly popular in the UK, especially amongst small business owners. It gives many individuals the opportunity to drive cars that they wouldn’t have been able to afford otherwise. It also gives them the option of upgrading to something else when the contract is over, so there’s never the chance of being stuck with a vehicle you dislike for an extended period of time.
How Does It Work?
A simple way of thinking about a leasing contract is to compare it to a rental. Rather than just owning the vehicle for a week or month long deal, though, leasing contracts generally last between 24-48 months. The fixed monthly fee that you pay to the lender will be dependent on the length of the contract, the annual mileage you expect to drive, and the specific model of car you’re interested in. It’s important to remember that, unlike a hire purchase, you’ll won’t actually own the vehicle outright, even at the end of your contract.
At this point most individuals look to take out another contract, either with a different car or with the same vehicle. Certain lenders will also offer you the chance to buy the car of your dreams outright. Under no circumstance will you be under any obligation to continue trading with the lender either. You’re free to explore other avenues when you’ve fulfilled your contract.
Are There Any Hidden Costs?
One of the most important aspects of any major purchase is understanding all the costs involved. For instance, while many leasing providers include breakdown cover in their monthly fees, it’s still your responsibility to make sure that the vehicle is insured. As every customer is different, lenders are unable to incorporate the price of insurance into their monthly fees. After all, everything from the driver’s age, past driving history, where they live, and their job effects their insurance quote.
The biggest chance of accruing unexpected fees when leasing a vehicle is through excess mileage charges. When you take out the contract on your vehicle, you’ll be agreeing to a limited annual mileage, usually 12,000 miles per year. Going over this will result in a direct charge for every mile over the limit. Check your contract’s terms and conditions for your exact fee.
Whether leasing is right for you will depend on your current situation. If you don’t need to own the vehicle, it could be the ideal solution.
