Car leasing has become an increasingly important way to get a new car and makes sense for numerous reasons. Here are some of the pros.
The Pros to Leasing A Car
Leasing a car allows you to have a brand-new car on the driveway for what is often a lower monthly cost as compared to other finance measures. As you are essentially renting the vehicle, you do not need to concern yourself with depreciation and can change to another car when the rental period comes to an end. The majority of lease deals are two or three years without any pressure to purchase the vehicle at the end of the contract.
Once the contract has ended, all you need to do is return the vehicle to the financing company without any costs to pay (providing you have kept to the T&Cs, but there is more on that later). You could also begin with a new contract without any monthly costs. This means you will not be tied down to longer contracts, and there is no long-term commitment involved. You will be free to continue without the hassle of selling or trading the vehicle. Do your homework and find the best car lease deals for you.
As PCH deals are placed on brand new cars exclusively, they continue to cover the manufacturer’s warranty. The length of the agreement typically means the vehicle has a warranty for the duration of the contract; therefore, you will not need to worry about expensive repair costs. New vehicles are less likely to experience faults; however, if something does happen, the lease company will need to deal with the issue and get it back to the best condition. You may be provided with a ‘gap insurance’ alternative as part of the contract; this means you will not need to pay the remainder of the contract if the vehicle is written off or stolen.
The monthly cost of leasing a vehicle can be lower than the cost involved in a PCP finance option as there is no option to purchase the car at the end of the contract. Consider this as renting the car for a few years, similar to a property rental instead of paying a mortgage. In addition to the initial rental, which is often cheaper than the financial deposit, there are no further charges, and you can opt for a brand-new car at a more affordable rate than you may expect.
The Cons of Leasing a Car
Similar to renting a home, instead of purchasing it, you will not own the leased vehicle. The payments are reduced for a reason, and you will not own the vehicle at the end of the contract. One of the primary benefits of purchasing a car on finance is the potential of driving it without any additional costs after the finance has been paid off; however, you will always pay for a lease.
You will also need to ensure that all damage is fixed before the vehicle is returned to the leasing company. While you may not need to pay for the mechanical elements covered by the warranty, the leasing company will expect the vehicle to be returned in the same condition it was leased. If it is not returned in that condition, you can be charged accordingly and may pay large amounts if you exceed the mileage limits set out in the contract.
Terms of a car lease agreement can be restrictive. In addition to potential extra charges, you will need to pay more if you want to return the vehicle before the contract end date (and this can be a substantial amount). Lenders will also want to ensure you are able to meet the repayment schedule, so they may carry out a credit history check and may be rejected if the score is not satisfactory. Of course, this is also the case for other types of car financing.
Finally, you will not be allowed to make modifications to the vehicle. If you do, you need to ensure the car is returned in the same condition with the same equipment as when you first collected it.
Should I Consider Leasing a Car?
Leasing can be the ideal means of driving a new vehicle and avoiding selling it when you no longer want it. However, this is not for everyone; therefore, it is important to consider whether leasing is for you and if you like the idea of car rental.