Leasing a car is a completely different process from buying a car. Rather than owning your car, it’ll be on loan, usually for somewhere around three to four years. After that time you get to choose if you want to purchase her or hand her over for a newer model. There are quite a few upsides to leasing a car – and some considerable downsides too.
Conventional car ownership has been on the decline in recent years. That could be down to COVID-19 and it could be due to the substantial costs that come with car ownership. When you buy a car, there’s a lot you need to dig into your pocket for. Car tax, insurance, regular MOTs, and servicing are all your responsibility. When leasing a car, some of these costs will be covered in your agreement.
The upside of leasing a car
When you lease a car, you agree to rent it from a dealer for a predetermined amount of time. Generally, that’s anywhere from 24 – 48 months. At the end of the lease period, the car gets returned and you sometimes have the option to buy it from the dealer.
Monthly lease payments are often less than loan repayments for a car. Lease deals tend to include other perks too. Road tax and roadside assistance may be included in the car leasing agreement. A lot of car leasing companies also offer maintenance packages to cover the unexpected. Because it’s a new car, regular servicing is likely to be covered by the manufacturer’s warranty.
As for depreciation, you won’t need to give it a thought! The car isn’t technically yours, so depreciation isn’t a worry. You will need to take care of the car though. Lease cars need to meet strict condition standards when it’s time to hand them back. The BVRLA has fair wear and tear guidance that most car leasing companies adhere to.
The downside of car leasing
The biggest downside of leasing a car is that, well, it’s not yours. The car is on loan and that agreement comes with some fairly strict guidelines and rules. For one, you’ll have to stick to an agreed yearly mileage. If you go over this, there are likely to be financial penalties. Most car leasing companies will allow you to increase the mileage throughout the life of your contract, but you’ll need to pay for the privilege.
Road tax is usually covered by the agreement but you’ll still need to sort out insurance. If you are involved in an accident, your insurance company will negotiate with the leasing company on your behalf.
When it comes to servicing and maintenance, you’ll need to take the car to the approved dealership for that make – no local garages will be acceptable. Taking care of the car over the life of the lease is a must. You’ll need to regularly take care of it inside and out – if it’s not up to standards you’ll be out of pocket. That can make leasing a car less than ideal if you have a young family – kids can be mucky creatures!
Getting a great deal on leasing a car
As with buying a car, there are good times and not-so-good times to lease a car. Monthly payments for car leases are calculated by the expected residual value of the car at the end of the agreement. Usually, the better the resale value a car has at the end of the term, the lower the monthly payments will be. That means great car leasing deals tend to be available for a short period right after they are released to the market.
That can be great news if you have your eye on something like the Lucid Air Pure or the Mercedes Benz AMG GT 63S E Performance which are both due for release in the UK next year. Some of the newest electric cars for older families might also be leased at a lower rate than finance repayments if newer models are due for imminent release. Leasing companies will need to move older stock to make room for the new.
Other times of year you’re more likely to get a great deal on leasing a car are early April (the end of the financial year) and off-peak times such as Christmas and New Year when most people are occupied with other expenses.
Leasing deals are possible on almost any make or model. Something like a Kia Picanto will cost you just shy of £10,000 new. On a lease, you can drive a Picanto for as little as £140 per month for four years; about 60% of its new car value. The bigger savings tend to be with more luxurious models as their resale value is often higher at the end of the agreement.
Buying vs Leasing a car
When it comes to getting on the road with a car, leasing is an option worth considering if you’re not fussed about owning your wheels. If you’re fastidious with car care and take pride in the wheels you get around on, car leasing is possibly the best way for you to drive the car of your dreams. It can turn out to be cheaper and easier than owning your own car outright.
On the other hand, if you have a tendency to develop emotional attachments to your wheels, leasing a car is probably not a great idea. If you have kids who have been known to make a mess, or you enjoy taking off on unexpected road trips just for fun, consider leasing carefully before you sign any agreements. Even better, look for a great used car in the make and model you’ve been dreaming of and make her your own!