Many people who don't want to come up with a huge deposit for a car tend to go for car leasing, and it works for them. The thing about car leasing is that it's a viable option if you don't want to spend too much money, and it frees you from dealing with car depreciation after a few years. The good news is that more independent car lease companies have sprung up in the UK, and since these companies are in competition with each other, car lease deals are more affordable and competitive than ever.
You can get a new car and be free to drive it around for a couple of years or longer, and at the end of your lease period, you can simply give the car back to the car lease provider. It’s that’s simple. But of course, just like any other deal, it pays to know more about how the whole thing works. Here’s your essential guide to car leasing in the UK – and how it works.
What it is and how it works
When you lease a car or vehicle, it's just like renting a flat or house – you will pay a deposit, you can use the item or object for a certain period, and you will pay a set monthly fee. When your agreement or contract is up, the article or object will go back to the owner. The deposit for a car lease agreement will usually be around three to six months' equivalent of the fee for the car model and make you want, and then you'll just have a monthly payment.
The concept is pretty standard and straightforward, but a car lease deal will usually last from two to four years. Of course, if you opt for a car lease deal, you will have to select your vehicle first, and it follows that leasing a small car such as a hatchback will be less expensive than leasing a top-of-the-line luxury saloon.
Know your budget
It’s essential that you know your budget before you sign a lease deal, although there are indeed many cheap car lease deals today. But you need to have a good idea of how much you can really afford to pay per month. You are, after all, signing an agreement which can last for two years or more, so you have to make sure that you will have no problems paying the monthly fee. The good thing about car lease deals, though, is that they are generally less expensive than buying a car or opting for car hire purchase, where you can purchase the vehicle once the term ends. The typical cost of leasing a car can range from as low as £99 up to £1000, with £200 to £300 being the average. Of course, the more expensive the car, the more expensive your monthly payments, so choose wisely.
What you can expect
Once you have chosen and ordered your vehicle for lease, you may need to settle a fee for processing, which usually costs between £150 to £200. But before you can do this, you will still have to get approved for financing and agree to the period of the lease. You also have to agree to a certain limit on mileage. But when everything has been finalised, the provider will arrange to have your car delivered to you.