What are the benefits of car leasing?
With new cars losing their value the minute they are driven off the forecourt, it’s no surprise that vehicle leasing is one of the most popular ways to finance a car.
Unlike buying a vehicle outright, leasing is essentially a long-term rental agreement on a new car.
It’s a little like renting a house or a flat. You pay a deposit, agree to pay a monthly fee over a set period, and at the end of that time you hand the keys back to the leasing company.
What’s great about leasing is that it offers you the freedom to drive a new car every few years, without the hassle of having to sell the car once your contract ends.
If you like, at the end of your lease agreement you can simply walk away without committing to another deal.
Another benefit is that if something suddenly went wrong with the car, it can be dropped off at the garage for no extra cost.
Leased cars benefit from having the manufacturer’s warranty from the get-go, so you won’t have to worry about those surprise repair costs on your new car.
What do I need to be aware of when leasing a car?
If you decide to lease a car, it’s important to be aware you won’t ever own the car, so you will need to take out fully comprehensive car insurance before driving away.
Third party cover would only pay for damage to other people’s property in the event of a claim, so you would be left to foot the bill for any repairs needed to the car at the end of the agreement.
You should also check with the leasing company what condition the car needs to be returned in.
Most providers and leasing companies use the British Vehicle Rental and Leasing Association (BVRLA) ‘Fair Wear and Tear’ guide as a standard to follow.
Being aware of this guideline will ensure you don’t get charged extra at the end of your lease agreement.
Don’t worry about a few marks here and there, as they won’t expect the car to be in showroom condition when you hand it back. But they will want it to be in a saleable condition.
It is also worth checking what penalties there are for missing monthly payments, or what it costs to end the lease agreement early.
Finally, it’s important to be aware that all agreements come with a limited mileage and if you exceed this limit, it’s likely you will incur extra charges at a rate per mile specified by the leasing company.
What are maintenance packages?
A maintenance package is an optional extra that can be added when you sign up to a car leasing agreement.
Although it’s not a necessity, it can be useful if you want the reassurance that any unexpected repair costs will be covered.
That said, most cars you lease are no more than 12 months old, so your lease term will rarely exceed the average manufacturer’s three-year warranty.
This means you’ll automatically be covered for all mechanical and breakdown repairs, as long as they haven’t occurred through driver error.
However, a warranty won’t cover general wear and tear on replaceable items in the car, such as tyres and batteries, and this is why you might want to consider a maintenance package.
Generally, a maintenance package will include the following:
- Free servicing
- Replacement tyres and batteries
- Most repair costs
Each leasing company will offer different maintenance packages on their cars, for which you can pay extra as part of your agreed monthly fee or pay separately.
But it’s worth thinking about whether you think it’s worth it before paying for a maintenance package.