Quick Guide to Personal Car Leasing
Without doubt when your own motorcar there are various awkward decisions to make. With the growth of car leasing in Great Britain, the way you purchase your car has never been more of a prominent concern.
Regardless of what method you prefer, it is going to be an expensive expenditure on your part therefore it’s fundamental to understand all the selections open to you before you can determine which is best.
In a nutshell, personal car leasing means you pay an upfront cost, normally 3 months payment, and then a monthly sum to drive your car for the full term of the lease, more often than not lasting between 2 and 4 years. The most important thing to note is that at no point do you actually own the car. At the conclusion of the term you return the car and take out a lease on a new car, though there will often be the alternative to buy the vehicle outright.
The monthly payments are figured based on the residual value – this is the cost of the brand new car minus the estimated cost of the car after the term of your lease. Consequently, if you look to lease a car that is well known for holding it’s residual value, such as a Volkswagen or BMW your payments will probably be less than cars which are known to depreciate quickly.
This is the key vantage of personal car leasing – if you were to buy outright your car would start to lose value as soon as you leave the forecourt, whereas if you lease, this is not your worry.Other advantages include:
- Smaller monthly payments than taking out a loan
- Lower down payment at the start of the lease
- More options in terms of cars available for you to choose from
- More choice – after the term, you can get a new car, buy the car or just walk away.
There are some disadvantages to contract hire, such as:
- The car is not yours
- Other charges maybe incurred based on periodic mileage
- Insurance – you will have to take out a comprehensive car insurance policy and consider additional cover, such as gap insurance to cover any possible shortfall in payments.
