General Guide to Leasing

What is Leasing

Leasing is often referred to as personal contract hire (PCH) or business contract hire (BCH). The terms are similar, differing only in whether an individual or a business is leasing the vehicle(s).

The best way to think about car leasing is like renting a vehicle. When you rent a car, you pay a daily rate based on the car model and other factors, and then return the car at the end of the rental period.

Leasing works similarly: you pay a fixed monthly fee to drive a new car for a set period, and then return the car when the lease term ends. There is no option to buy the car; you simply return it, and the contract is over.

You do not own the car in either example. In the rental example the car is owned by the rental company, in the Leasing example the car is owned by the finance company sometimes referred to as the funder.

How Does Leasing Work

When you lease a car, typically a new one, the contract cost is divided into equal monthly payments. The contract duration usually ranges from two to four years.

In most cases, you pay an upfront cost in the first month unless you choose a No Deposit leasing option, after which you make fixed monthly payments for the rest of the contract.

Deals are often represented by two numbers, such as '9 + 35', meaning an initial payment equivalent to nine months' rent, followed by 35 monthly payments, totaling 36 months.

You usually have many choices when leasing a car, including the make, model, and specifications. The contract will be tailored to the specific model, your estimated mileage, the contract length, and the payment structure, offering a lot of flexibility.

The leasing contract cost also depends on the vehicle's residual value at the end of the contract period.

Is Leasing a Good Option

Leasing is often the most affordable way to drive a brand-new car, especially for more expensive models, which is a key reason many people choose leasing over buying.

• It may reduce the initial outlay required
• It removes the risk of depreciation associated with ownership
• It means you do not have the hassle of selling the car
• Road tax, warranty, and breakdown are included
• And you can include maintenance, including servicing and tyres 

Are There Any Potential Issues

Leasing may not be the best choice for everyone and we are here to guide you through the process and options.

• There are other options that are easier to terminate during the contract
• There will be limits to the number of miles you do in the contract
• You are responsible for maintaining the vehicle in a good condition

Advantages of Business Car and Van Leasing in the UK.

By understanding these advantages, businesses can make informed decisions about vehicle leasing, balancing financial benefits with operational flexibility and sustainability.