Leasing a car: what you need to be aware of.

Car leasing options are attractive if you’re looking to pay fixed monthly costs at an amount lower than the sums you’d be paying under either a credit agreement or a hire purchase option. You are essentially paying to use the car for a fixed period. You are also generally tied to a fixed mileage limit (although this can usually be extended upon payment of an additional charge). Leasing is popular with drivers who like the idea of running a new car every few years and who do not want to be tied down to outright ownership.

This is just a brief article explaining the various terms and conditions of vehicle leasing, for a more in-depth look at finance agreements and the various types of leasing agreements, head to our “Help with Vehicle Leasing” blog page.

How are the costs calculated?

A typical lease lasts for two to three years. Very broadly, the amount you pay under the lease is based upon expected depreciation (i.e. the likely value of the car at the end of the lease period – taking into account age and projected mileage.) Comparatively speaking, cars that tend to hold their value represent the best deal when it comes to leasing.

Are there any up-front payments?

Just like with leasing a flat, you generally have to pay a deposit. The exact terms vary very often dependent upon your credit history and you should expect to have to undergo a credit check. In fact, the better your credit history, the more doors are likely to be open to you in terms of leasing options. Typically though, you may be required to pay three month’s payment in advance along with a security deposit. This may seem a lot, but it’s still likely to be significantly lower than the amount you’d pay as a deposit on most credit deals if you were buying.

What about mileage?

Because depreciation depends so heavily on the number of miles a car has done, the mileage allowance is a key feature of the leasing agreement. The allowance is generally between 10,000 and 50,000 miles per annum. It’s worth giving careful thought to your likely mileage before you choose your lease option. If you go over your allowance, you’ll be liable for extra charges that are likely to be higher than the amount you’d have paid if you’d opted for a higher allowance at the outset.

What happens at the end?

Quite simply, you hand back the keys. Providing there isn’t any undeclared damage other than normal wear and tear, you have no further charges. If you’ve taken a real shine to that particular vehicle, you may wish to buy the car from the dealer for a predetermined price (most leases include this option).

Don’t concentrate solely on the monthly payment amount or on the level of deposit when you’re deciding whether the deal’s for you. Remember: always check the total amount payable under the lease when you’re comparing options.

In Conclusion

You yourself, don’t need to get bogged down spending hours on the internet, talking to many vehicle suppliers and then having to deal with the follow up calls (or not, as the case may be) from the different companies – you can simply go to an independent specialist like OSV Limited  describe the type of vehicle you are after and what you want to achieve and they will do all the leg work for you.  They will come back with solutions to enable you to review and make an informed decision – all at no charge.