Your guide to : what you need to know before leasing a car

Carole Nash Classic Insurance Specialists

There really is nothing better than that new car smell, but driving a brand new car can be very costly. Car leasing seems to be answer to the problem as it allows you to drive a brand new car without the huge cash outlay. Leasing can be a great option for many different people and here we are taking you through the things that you need to know before you lease a car.

It’s a pay-for-use contract

Before leasing a car, the best way to think about it is as a pay-for-use contract. When you are leasing a car, you are essentially covering the depreciation value of that car. So, you can drive a brand new car and then walk away after pre-agreed period of time which is normally around two years. If you are not bothered about owning your own car, then leasing really is the best option. Plus, if you love to drive a brand new car, there really is no other more cost effective way to do so.

It affects your credit score

When you take on a car leasing contract, a very important thing that you need to know is that it affects your credit score. When you apply for a car lease, a credit check will done to ensure you are suitable for this type of contract. A lease is an instalment loan and so, if you have any doubt that you will not be able to keep up with repayments, you may want to consider special car leasing deals or another option entirely.

Negotiating a lease

If you have been doing your research into car leasing, one thing that you may not already know is that you can actually negotiate your car lease! While a car loan comes from a bank, a car lease comes from car manufacturers and so you may be able to negotiate a little on the price. If you are going to be leasing a car, we would definitely recommend that you try and lower the capitalised cost.

There is no harm in trying and you may just be able to bag yourself a fantastic deal! You can also try and knock off some of the extra added small costs such as tyre fees and document fees if you play you cards right. Remember, you have the upper hand in these negotiations!

Repairs

Although you are essentially renting the car, it is important to remember that you will still be the one to take on the financial costs of repairing and maintain the vehicle. While some dealerships will offer you some free freebies such as oil changes, you will be required to keep up the majority of the car’s maintenance. While a new car shouldn’t really need much in the way of maintenance, accidents do happen, which can be anything from a chip in the paint to a broken windscreen.

Keith Adams

Keith Adams

Editor and creator AROnline at AROnline
Created www.austin-rover.co.uk in 2001 and built it up to become the world's foremost reference source for all things BMC, Leyland and Rover Group, before renaming it AROnline in 2007.

Is the Editor of the Parkers website and price guide, formerly editor of Classic Car Weekly, and launch editor/creator of Modern Classics magazine. Has contributed to various motoring titles including Octane, Practical Classics, Evo, Honest John, CAR magazine, Autocar, Pistonheads, Diesel Car, Practical Performance Car, Performance French Car, Car Mechanics, Jaguar World Monthly, MG Enthusiast, Modern MINI, Practical Classics, Fifth Gear Website, Radio 4, and the the Motoring Independent...

Likes 'conditionally challenged' motors and taking them on unfeasible adventures all across Europe.
Keith Adams

6 Comments

  1. One other thing to consider is the fact you are limited to how many miles you can do and if you do too many miles you get stung for excess mileage charges.

    • There will s no “sting”. You’re purely paying for the additional depreciation incurred as a result of the extra mileage done.

      If you’re honest with both the finance company (and yourself!) about your likely mileage, at the very start of the agreement, it should never be a problem.

  2. Also, The car must be returned in pristine condition after the lease period ends or further penalty payments are due. In my opinion, many people who go for PCP are just trying to show off and give the impression that they are well to do – but they are just disguising that. Otherwise as many car deals are done by PCP these days, it’s just a way of increasing car sales and new registrations.

    The chickens will come home to roost big time!

    • I’ve heard a few horror stories about penalty payments at the end of a lease/PCP, but I think most manufacturer-backed schemes are reasonably fair about what constitutes wear and tear. Ultimately, they want customers to come back for another Audi/BMW/Merc again and again on a three year replacement cycle – they don’t want to lose repeat business for the sake of a lease return charge of a few hundred quid.

      If people can afford the monthly payments and understand they’re not keeping the car at the end of the deal, then where’s the problem?

      I don’t think the PCP brigade are trying to show off – I’m not sure that a new car is a reliable marker of wealth or success in 2018, particularly to younger city-dwelling folk. Some people (rich and not so rich) just like new cars and are willing to pay a premium for that.

    • If PCP is “just another way of increasing car sales and new registrations”, how is this different from any other finance product, or bank loan, that’s ever been used to finance a new car purchase?

      No car maker is ever going to surivive by selling used cars for cash and they need every method possible to make buying new cars as affordable as possible.

      • Perhaps I should have said “It’s another (newer) way of financing a new car especially for those who couldn’t otherwise get one”? I’m fortunate enough not to need PCP, but there again I usually buy a one year old vehicle every 3-4 years by part-ex

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