There is no right or wrong choice when it comes to leasing vs. buying and it comes down to your personal preference. If you decide to buy a car outright, then you will have full control over the configuration, trim and style of the car. You also won’t have to worry about restrictions on annual mileage. However, financing a new or used car, rather than buying it outright will usually come with some mileage restrictions.
Cars tend to depreciate quickly in value, at varying rates depending on the manufacturer. This means that it will be worth much less by the time you want to sell it. Leasing can be a great way to mitigate this because you simply hand the car back once the lease period is over. Leasing can also be a good option for drivers who prefer to drive a new car and exchange it every few years for a new one. And because brand new cars don’t need an annual MOT for the first three years, and because road tax is often included in the deal, leasing can actually work out cheaper per month than buying a car in cash or through financing.
PCH means that you will never legally own the car. Once your leasing period is over the vehicle has to be handed back. PCP gives you the option to buy the car outright at the end of your contract. Some people refer to this as the ‘balloon payment’ and the final lump sum will be significantly larger than your previous monthly payments.
You will need to speak to the lease company to explore whether they offer test drives. If they do not offer this option, then you can usually arrange a test drive through the manufacturer’s website or local dealership.
New cars do not need an MOT until they are three years old. If your lease runs for 36 months, then you don’t need to worry about it, but if your lease lasts more than 36 months, then it will be your responsibility to arrange for it to get an MOT.
Road tax is often included in the lease agreement, but do check to make sure as each agreement has its own terms.
Yes, car insurance in not included in the lease agreement and you are responsible to get the car insured. Make sure that you mention to the insurance company that the car is leased.
This depends on the leasing agreement. Some leasing providers offer maintenance and care packages that cover servicing. On YesAuto, we offer a search filter that allow you to only view leasing deals that include maintenance.
If you exceed the agreed annual mileage, then you will likely have to pay excess mileage charges. The exact charges depend on your leasing agreement. You won’t pay for any additional miles until the end of your lease, so you can even out the annual mileage over the course of your lease. If for example you have a three year lease with 10,000 miles per year then you could do 12,000 in year one, 10,000 in year two and 8,000 in year three bringing your total to 30,000 miles.
If you think you will exceed the maximum allowance agreed within your lease, then you should get in touch with the lease provider to see if you could get a new quote. Changes are at the discretion of the provider and it will mean changing you monthly payments.
It is your responsibility to take care of the car in line with the guidelines of the manufacturer. BVRLA's Fair Wear and Tear Guide applies when the car is handed back and is the industry standard. Before the end of your lease it is a good idea to thoroughly inspect your car to make sure there are no unexpected damages such as chips or dents in the body works or tears or burns on car seats.
If your car is written off or stolen, the insurance company will negotiate directly with the leasing company. Each leasing company will have their own policy and you should check the leasing agreement to understand it. There is a risk that there will be a shortfall, which needs to be covered by you, so you may also want to consider GAP insurance to ensure that you are fully covered.
By the end of your lease you need to return the car to the leasing provider. You’ll arrange a collection and they will inspect the vehicle for fair wear and tear as well as all necessary paperwork.
Yes, you can, but there will be a financial penalty for doing so. If you want to end the leasing deal before your agreed end date, then you should get in touch with your leasing provider and request an early settlement figure.
You may also be able to transfer the leasing agreement to someone else who will continue to pay the monthly payments and thus get out of paying penalties. Your leasing provider will be able to tell you if a transfer is permitted.
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Whether you’re choosing between HP or PCP, or considering PCH leasing, you can compare different finance options on YesAuto to find what’s right for you.
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