Finding a new car should be an exciting enterprise, and if you're like most people, you want to get behind a new set of wheels that make you feel proud and confident when you're out on the roads. But now more than ever, buyers are looking to rent their vehicles instead of owning them, committing to a much shorter payment plan and not having to worry about the long-term value of the vehicle.
So if you're in the market for car leasing deals, or just want to know more about the process, we here at hotukdeals not only have the best car leasing offers but we've also put together a brief description to give you all the information you need to get you on your way and into a new set of wheels.
The Two Main Types of Car Leasing Agreements
Leasing a car is an effective long-term rental. You pay a fixed monthly fee to use the car for an agreed time period and number of miles. It’s a bit like renting a flat – you can treat the car like yours but you won’t actually own it. In any case, the finance company will carry out a credit check before agreeing to a contract. You’ll also need to arrange your own car insurance for a leased vehicle as financing companies will likely insist you have fully comprehensive cover rather than just a third party option.
That being said, when it comes to finding your contract there are two main types of agreements to consider; Personal Contract Hire (PCH) and Personal Contract Purchase (PCP).
PCH is the most common form of car leasing and usually has both lower deposit requirements and lower monthly payments when compared to PCP. With a PCH deal its normal to pay three, six or nine months’ rental in advance, followed by monthly payments for the remainder of the lease, which tends to be between two to five years.
When you see PCH deals advertised you’ll see a monthly price followed by something like 3+35. The first part (the 3) refers to the initial payment you pay at the beginning of your lease. If an offer is advertised as 3+ it means you pay 3x whatever the monthly payment is. The second part (the +35) refers to the length of the contract. So, after the first month, this is how many months the contract will last.
A deal will also include the maximum annual mileage you’re allowed to drive in the car. If you exceed this figure, you’ll penalty will incur. The higher the mileage limit you choose at the outset, the more your payments will be. and of course, at the end of the term, you have to return the car back or sign a new lease.
Personal Contract Purchases(PCP) works in a different way, instead, you’ll pay a deposit (roughly about 10% of the car’s value) and then monthly payments. At the end of the term, you’ll have the option to buy the vehicle for an extra payment commonly referred to as a ‘balloon’ payment. The leasing company will determine this figure at the outset of the lease and is called the minimum guaranteed future value (MGFV) and could be a few hundred or even a few thousand pounds depending on the car and your monthly payments will be based on an estimate of how much the car will lose in value through depreciation between the start and end of the contract.
When the contract ends, you have the option to either hand the car back to the dealer without making the balloon payment or pay the balloon payment and keep the car.
5 Thing to Consider Before Agreeing to a Car Lease
Leasing is definitely a strong option for anyone looking for access to new vehicles at affordable rates. Instead of spending thousands on buying a new vehicle and taking on all of the responsibilities that come with ownership, you can save a bit of money and use it for other expenses. So it seems like a pretty nice deal right? But here are a few things to consider before signing anything.
Check Current Discounts
Be sure to check that you haven't missed any of the most recent discounts on offer. Auto manufacturers regularly offer discount leases to their dealers but won't necessarily inform customers about them. So be sure to continually check in on the hotukdeals car lease listings page and enquire with your local dealerships about current promotions.
Understand the Residual Value of the Vehicle
The residual value of the vehicle is the amount your car will be worth when the lease expires, and by comparing the residual values from several dealers you can determine whether or not you're getting a fair price. There are also several websites that will help ease that process for you, one of the best of them being leasecomparison. These websites really take some of the stress out of the process, but it's important to know that even the best car lease deals are constantly changing.
All leases come with mileage limits, and some drivers will need a higher limit than others. So be sure not to sign terms that will restrict your freedom and lifestyle. However, if you don't plan to drive your car as much as others or if you have a short commute having a low mileage limit may end up saving you a lot of money.
Just about every car lease comes with fees, either at the front end of signing the contract or at the end of term when you turn in the vehicle. Dealers are notorious for not disclosing these fees up-front and comparison sites should offer more insight into what you can expect.
Leases aren’t always set in stone, and renegotiating agreements has become quite common (if you need to add a driver, change the insurance or add extra miles, for example). You might also want to transfer the lease to a new owner if you're trying to move on from your vehicle in the middle of the contract, but not all companies cater to this. Also worth mentioning is the difference between upfront and monthly payments. Dealers can attract customers through advertising generous monthly rates, but charging higher upfront fees. Don’t be seduced by seemingly generous packages because although they may seem like fantastic discounts, there could be some surprises lurking amongst the fine print.
Pros and Cons of a Personal Contract Hire (PCH)
A Personal Contract Hire is the most common leasing contract throughout the UK, this is due in large part to accepting less risk and having more flexibility in contract. So here is a list of some of the good and the bad aspects of signing a PCH when leasing a new car.
Depreciating Value Doesn't Play a Role
Easy to Upgrade Your Car Every Couple of Years
Monthly Payments are Cheaper Than With a Credit Agreement
You Never Own the Vehicle
Tied to the Entire Term of the Contract
You'll Have to Maintain the Vehicle to a High Standard
You'll Need Permission From Your Contractor to Take Your Vehicle Abroad
How to Get a Quote and a New Lease?
Purchasing a car can be stressful, so here is a quick breakdown of some of the broad steps it takes to get a quote and ultimately lease the car of your dreams.
Research the models you're interested in and know exactly what cars you're serious about committing to.
Search dealers and services to see where the best deals are located, of course, hotukdeals has all the best deals and offers right in one place so that may be a good starting point.
Calculate the cost of a lease vs. the cost of buying the vehicle you're interested in to make sure it's still a cost-effective option for you.
Choose a dealer or purchasing service and apply for a lease either online or in person. Online applications are often quite easy to fill out and you will be sure to hear back in just a matter of days.
Once you have been approved for your lease, sign and return the documents to the dealer.
Before you are able to pick up your vehicle you'll have to arrange a comprehensive insurance plan. This is required by most leasing services and you will not be able to drive the vehicle until this step is taken care of.
Drive away in your car once all of the documents are in order and you're fully insured.
Answers to Your Frequent Car Leasing Questions
Is Car Leasing Worth It?
Yes, If you don't want to take on the risk or financial commitment of buying a car, leasing can be a great way to still drive the vehicle you want without committing to the full cost of ownership.
Does Car Leasing Include Insurance?
No, leasing a car is separate from insurance and you will have to acquire a policy on your own. Also worth noting, most lease agreements require a comprehensive insurance plan instead of 3rd party insurance.
Is Car Leasing a Good Idea?
Yes, if you need a car and you're on a budget, leasing a car can often provide you with an inexpensive way to get around without having to ultimately pay for the full cost of the vehicle.
Is Car Leasing Cheaper Than Buying?
Yes, In terms of the overall cost of driving a new car, leasing is absolutely cheaper than owning a vehicle outright.
Does Car leasing Include Servicing?
No, a basic lease will not include servicing, however, most dealerships will offer the ability to add services to your lease for an additional fee.
Where to Find the Best Car Lease Deals
Now that you’ve made the decision to begin the leasing process, where do you start? As previously mentioned, shopping around is vital if you want to find a competitive car lease deal. So don’t just step into the nearest Ford or Mercedes dealership and expect to get the best terms in town, as that’s not the recipe for success.
One option is to to use a car lease comparison tool like Whatcar.co.uk where they will come up with dealers near you for almost any major manufacturer across all product types. Websites like Yes Lease and National Vehicle Solutions are more focused on value for money in terms of common personal and family vehicles. Whereas companies like Select Car Leasing are great for luxury and higher-end vehicles.
Alternatively, you could head straight to the UK’s largest car leasing companies like Nationwide Vehicle Contracts, who have very easy-to-use websites that offer real-time updates on information regarding prices and rates for all major car brands.
What about the best time of year to lease a car? Well, as with many industries, the car leasing sector has quiet periods, and these are often the best time to spot great deals. Black Friday, Cyber Monday and New Years are good times to look, as few people are spending on cars then. However, deals can pop up when different manufacturers have excess stock to clear, so you can never tell when you’ll be in luck. The best thing to do is check on a regular basis for cheap car lease deals here at hotukdeals and to shop around intelligently.
Be Sure to Follow the Lates Car Leasing Offers at hotukdeals
Leasing your next vehicle could be the perfect solution to gaining access to all of the latest car models at a lower cost than purchasing. However, it’s easy to sign leases that don’t provide good value, so use our purchasing guide and make sure you understand exactly what you're signing on for. And as always, be sure to check out the car lease listings at hotukdeals and see what the UK’s leading dealers and carmakers are offering to find the best car lease service in the UK for your specific needs.