Leasing a Car: The Process

Leasing a car is now more popular than ever, with many road-users opting to lease rather than buy a brand new car.

Whether you are interested in personal car leasing or business car leasing, the simple and easy process allows companies to provide an abundance of leasing options to cater to your specific needs.

Here, we outline the process of leasing a car in the UK, the variety of options available, as well as the costs and what exactly is included in the lease. 

How Does Car Leasing Work?

The Process of Leasing a Car

Why Lease a Car?

Personal Car Leasing: What is it?

Business Car Leasing

Short Term Car Lease

Car Leasing Terms and Conditions

Getting Insurance for a Leased Car

The Cost of Car Leasing

Car Leasing Quotes

How Does Car Leasing Work?

Leasing a car can be explained as an agreement somewhat similarly to renting a car (or anything else, for that matter).

You basically pay the finance company to use the car with one initial rental payment followed by monthly instalments over a fixed term, usually lasting one to three years.

When the contract comes to an end, you typically have the option of buying the vehicle (if you have a PCP arrangement), upgrading to a brand new car and starting a new contract, or you can simply walk away.

The contract differs depending on the type of lease or purchase agreement you have (PCP, PCH, BCP, etc.), which is explained in full detail later in this article.

The Process of Leasing a Car

The car leasing process can be broken down simply and is pretty easy to understand.

Choose Your Vehicle

Firstly, take a look around for the right car for you. Remember, leasing makes it more affordable to drive a car that would usually be out of your price range.

Decide on the Leasing Terms

With many car leasing options available, it is important that you choose a contract that suits you personally.

You need to determine the maximum mileage allowance you are going to need, which is typically around 10,000 miles per year, as well as the length and type of lease contract.

The longer the car lease, the cheaper monthly payments tend to be.

Get in Touch!

Determining the best car lease for you can be a stressful process if you don’t know exactly what you want. Start by getting in touch with Complete Leasing and they will find the right vehicle for you under terms that best suit your personal situation.

A member of the expert team will advise you and offer you a free, no-obligation car lease quote, using the information provided by you to gauge an idea of what lease you will benefit most from.

Car Leasing Credit Application

There is then a quick and easy credit application that you must complete in order to get credit approval.

There are also options for car leasing with bad credit, just let one of the dedicated consultants know.

Confirm and Complete the Contract

Once the vehicle specifications and final details of the financial agreement are confirmed, your order will be placed and the car will be with you shortly.

Finally, the direct debit is set up, your brand new car arrives, and you can start driving it!

Why Lease a Car?

If you are sceptical and wonder why people lease cars instead of buying them, here’s a list of some car leasing benefits:

  • Drive a brand new car at an affordable rate

  • Upgrade to a new model regularly

  • Road tax is included, as is a warranty

  • No MOT needed if the contract is three years or less

  • Options to buy and keep, upgrade or end the contract once it is complete

There are pros and cons to both leasing and buying, so you will need to weigh-up your options before committing to a financial agreement of any sort.

When deciding whether to buy or lease a car, you should keep in mind the distance you are likely to travel, the likelihood of you wanting to sell the car, the depreciation rate, how often you usually purchase a car, as well as many other factors.

There is no clear-cut answer to which is better, but car leasing certainly offers the most cost-efficient way of driving your dream car.

Personal Car Leasing: What is it?

There are two types of personal car leasing and finance contracts: Personal Contract Hire (PCH) and Personal Contract Purchase (PCP).

Both have become hugely popular methods of car financing, offering low initial payments (in accordance with the car’s depreciation) and an affordable, cost-effective alternative to buying.

Personal Contract Hire (PCH)

Possibly the most common form of personal leasing, Personal Contract Hire (PCH) allows you to drive a new car regularly by paying fixed monthly instalments, with no obligation to buy the car at the end of the lease.

As with most lease agreements, you will pay an initial rental fee which often works out as the equivalent to a sum between three and twelve months’ worth of instalments.

This payment can fluctuate and can be negotiated with the leasing company, so negotiate to pay as much (or as little) as you want.

To be eligible for PCH, you simply have to be over 18-years-old, have a full driver’s licence, have both an address and employment history of three years, and more often than not, a good credit rating – but there may be short-term leasing options for those with bad credit.

If you feel that you would like the option to buy the vehicle at the end of the lease term, you can always opt for the increasingly popular Personal Contract Purchase (PCP) finance agreement.

Personal Contract Purchase (PCP)

Personal Contract Purchase (PCP) offers similar benefits to PCH, but includes an option to purchase the vehicle through a balloon payment at the end of the lease agreement in order to take full ownership.

With a PCP lease, you will be paying the difference between the original value of the vehicle and the guaranteed future value (GFV) – a predicted amount the car will be worth at the end of the lease.

So, a car worth £30,000 at the time of leasing could have a GFV of £20,000, meaning that you will only be paying back the difference (£10,000) in monthly instalments.

At the end of the PCP, you can either:

  • Keep the car by paying a balloon payment;

  • Replace the car with a new model and begin a new lease;

  • Or end the contract completely and hand the car back to the leasing company.

Business Car Leasing

Business owners can also take advantage of the many car lease deals available through Business Contract Hire (BCH).

BCH offers a convenient and cost-efficient way of businesses leasing brand new cars, whether it is a couple of cars or a full fleet.

Business contracts offer many of the same benefits as PCH, along with some additional advantages.

The contract can be fixed or flexible term, allowing business owners to adapt and choose which option best suits the size and circumstances of their company.

The VAT is also recoverable through BCH, which saves businesses a considerable amount of money that they could invest elsewhere.

All businesses can recover up to 50%, with those who use the vehicles for business reasons only (no personal use) being able to recover up to 100% of the VAT.

Short Term Car Lease

As previously mentioned, there are a variety of car lease contracts to choose from which vary in terms of length.

The standard long-term car leases typically last between one and three years, but there are shorter options available.

Short term car leasing is useful for both business and personal contracts, largely due to its flexibility.

Complete Leasing offer contracts from three months to twelve months, depending on your preference, allowing you to choose the right short term lease for your situation.

It is worth noting that any contract longer than the twelve-month threshold is then categorised as a standard, long-term lease.

Car Leasing Terms and Conditions

When you set up a lease agreement, you will negotiate and settle an annual mileage limit. Should you exceed that limit, it is likely that you will be charged at a rate stated in the contract.

Any trustworthy dealership would make this clear to you before you purchase.

Cancelling or changing the contract can also be expensive, so be sure to have a clear understanding of what you want and what you’re getting from the start.

You never actually own the car if you lease it, unless you purchase it at the end of a PCP, so you need to ensure that you do not damage the car badly. There are ‘fair wear and tear’ guidelines to adhere to, so take care of the car!

If you give Complete Leasing a call, the team will ensure that all of these conditions are clear to you so that you are not surprised by any unexpected costs.

Getting Insurance for a Leased Car

It is important to keep in mind that your lease agreement does not cover your insurance; you will have to arrange that yourself.

Car insurance is legally required to drive in the UK, so you need to ensure that it is in place before you take your new car on the road.

Fully comprehensive cover is needed, which will cover theft or any accidents you are involved in.

The Cost of Car Leasing

The cost of your car lease will depend on a number of factors, most notably the make and model of the vehicle and the length of contract.

Prices also vary between dealerships, so be sure to shop around before committing to an agreement. 

The monthly cost is generally lower if the car’s predicted value when you return it is high. So, less depreciation typically correlates with a lower monthly payment.

The Cost of Leasing an Audi

You can currently lease an Audi A1 30 Sportback for an initial rental of under £1,400 (inc. VAT) and just £232.60 (inc. VAT) a month.

The Cost of Leasing a BMW

The popular BMW 1 Series 118 is currently available for an initial rental fee of £1641.60 (inc. VAT) and £273.60 (inc. VAT) a month, for a contract lasting 48 months with a 10,000 annual mileage limit.

Complete Leasing work with dozens of car manufacturers in order to supply you with the best range of leased cars, from Audi A7s to Mercedez-Benz Citan vans.

All prices above are correct at the time of writing, but take a look the latest and up-to-date car lease deals here, where you will be able to search using filters in accordance with your specific preferences.

Car Leasing Quotes

Car leasing basically provides a cost-efficient alternative to buying which allows you to drive cars that would typically sit outside your budget.

You can upgrade your car every couple of years, and you don’t have to deal with the burden of selling the car once it depreciates. It is undoubtedly worth consideration, so don’t miss out.

The advisory team are always available to provide free advice and consultancy to anyone looking to lease a vehicle, whether it be a short-term PCH or a long-term BCH.

Whatever your circumstances, be sure to contact Complete Leasing today for your first car leasing quote!

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