The Ultimate Guide To Leasing A Car

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Here's the contents of our guide - 

• What is car leasing?

• How does car leasing work?

• What costs are involved with car leasing?

• What are the benefits of car leasing?

• What are the disadvantages of car leasing?

• Is car leasing different to PCP?

• How do I get the best car lease deal?

• What is fair wear and tear?

• Who are the BVRLA?

• Car leasing FAQs

What is car leasing?

Car leasing, also known as Personal Contract Hire (or PCH for short) is essentially a long-term car rental where you pay a fixed monthly cost for an agreed term, usually between 2 and 4 years. At the end, you can simply hand the car back and start again or if you'd prefer, you can request to extend your lease, or even request to buy the car.

It's a great option for businesses looking for vehicles, too (also known as Business Contract Hire or BCH for short). As a whole, leasing works the same for businesses, with a few pros and cons which you can read in our Personal Lease or Business Lease? guide.

How does car leasing work?

Firstly, you need to pick the car you want to lease. Next, pick your lease terms, which include how long you want to lease it, your mileage allowance, and how much you want to pay upfront. This is referred to as the initial rental and the higher. itis, the less you pay per month, and vice versa.

When looking at lease deals online, you'll often see the initial rental is the equivalent of a number of monthly rentals, usually 1, 3, 6 or 9, but is often customisable if you want to put down a specific amount, like £1,000 for example.

Once you've decided on these factors and you're happy with your lease offer, submit a few details, sign a few documents, and away you go.

What are the other costs involved with leasing?

Every lease is based on a contract mileage, which you pick from the start. If you exceed it you'll have to pay a fee (known as an excess mileage charge) when the car goes back, which is calculated by a pence per mile. This is agreed at the start so there won't be any surprises, plus you can increase your mileage mid-lease if you want to. Of course, this will bump your monthly rental up, but might be cheaper than paying the excess mileage bill at the end.

During the lease, it is up to you to keep the vehicle maintained and serviced correctly, in line with the manufacturer's guidelines. In other words, if the car tells you it needs a service, you need to book it in. This includes but is not limited to; oil changes, servicing, replacing the tyres, etc. However, you can include a maintenance package which covers all of these costs and more, like punctures.

You'll also need to sort out fully comprehensive insurance, as typical leases do not include insurance. Just make sure you select private lease/lease company (if you're leasing it personally) or business lease/lease company (if you're leasing it through a business) when asked who the registered owner and keeper is.

What are the benefits and disadvantages of car leasing?

Is car leasing different to PCP?

While both car leasing and Personal Contract Purchase (PCP) involve driving a vehicle without owning it outright and paying a fixed monthly cost for an agreed duration, they are different financial arrangements with distinct characteristics.

Car leasing typically involves paying a fixed monthly rental for the use of a vehicle over a set period, usually two to four years. At the end of the lease term, the vehicle is returned to the leasing company, and you have the option to lease a new car or walk away.

On the other hand, PCP involves paying monthly payments towards the total balance, along with an optional final payment (known as the balloon payment) to purchase the car at the end of the contract.

We've got a whole guide on this, so if you're unsure which one is right for you, it might be worth a read: PCP vs PCH - Learn how both work and which one is best for you.

How do I get the best lease deal?

There are many ways to ensure you are getting the very best deal, in fact, we've written a guide on it: Get the Best Personal Lease Offer - Top tips to make sure you get the best lease deal.

But to sum it up, here are some of our best tips:

• Be open to alternative options
  You might want a specific car, but if you're open to other models, you might find a very similar car of very similar value, for a lot less per month. This could be for a number of reasons, but as simple as the other car is on a special offer.

• Special offers
  Speaking of special offers, it is always worth checking out what is on special offer. Sometimes you can find a really good deal on a car you thought would be out of budget

• Be flexible with timings
  Not everyone can do this, but if you can, be flexible with timings. Sometimes it is far cheaper to factory order a car which might take 4-5 months, compared to ordering a car from stock. Sometimes, it is the other way around - just ask us.

• Check out different lease terms
  A longer lease is not always cheaper, so if you're interested in getting the lowest price possible, it is worth looking at all lease terms.

• Outgoing models
  If you're not too worried about having the very newest model, it is worth checking out what deals there are on outgoing models. You might be able to get a really good deal because a stock car is about to become the 'old model'. Still brand new, mind you!

What is fair wear and tear?

Wear and tear happens to everything we use; our shoes, houses, devices, and cars. It is the deterioration that naturally occurs when you use something. With a car, it would be things like worn carpets, small chips and scratches, and maybe a few minor scuffs on the alloys.

But there is a line drawn between what is fair wear and tear, the deterioration that is expected based on your lease term and mileage, and excessive wear and tear, which is the damage that is over and above deterioration.

Excessive wear and tear could be big chips or scratches, dents in bumpers, and large scuffs on the alloy wheels - the stuff you probably could have avoided with a bit more careful driving.

What happens if I hand the lease car back with damage?

Simply, you'll be charged to put the damage right. However, there are a few things to consider...

Firstly, you can put any damage right before it goes back, which might save you a few quid. You can do this using smart repairers or local body shops, who will be more than capable of sorting.

Secondly, the damage charges are not as bad as you may think. These leasing companies deal in such high volumes and most of the time, your car is collected and auctioned off - so it is in their interest to get the cars repaired quickly.

If you're unsure whether or not to get any damage repaired, just take a few pictures and send them to us. We can give you a good idea of whether we think you should sort it or just hand the car back with it - in some cases, we'll be able to give you rough costs, too.

What is the BVRLA?

But, fear not - each leasing company has to abide by the BVRLA, the UK trade body that set out the Fair Wear and Tear guide. This guide not only ensures that the charges are fair and not unreasonable, but it also allows you to understand damages and how the charges work. This way, you'll be somewhat clued up when it comes to the collection process.

They are also on hand if you need help with charges you might not agree with. You can contact them here.

Here are a few questions we get asked a lot about car leasing