Car Leasing

Yes, unless your lease deal has insurance included, in which case it will be folded into the monthly payments for the car. These types of deals are often referred to as ‘Total Care’ leasing.

For the most part, standard leasing agreements won’t include insurance. The finance provider (who owns the vehicle) will require you to insure the car with a fully comprehensive policy. This covers damage to the vehicle and any injuries you or your passengers may have if you’re involved in an accident.

There are car lease deals available with insurance included, however there are criteria you must meet to be approved for these types of deals:

• You must be at least 21 years old

• You must have a full UK driving licence valid for at least a year

• You can’t have more than six points on your licence 

In many cases leasing with insurance also includes breakdown assistance, maintenance and glass protection. 

Make sure that you shop around to find a deal which has everything you need included.

Business car leasing is for working professionals who need a car to use for work purposes. The finance agreement is in the name of the company and its director, who is responsible for paying for the vehicle.

Personal leasing is for private individuals who want to use a car for any means, including both private and work journeys.

The key difference between the two is that business leasing has cheaper monthly payments. This is because VAT-registered companies can claim back 100% VAT on the rentals for the car, provided that the car is only used for business purposes.

Once you’ve met all your monthly payments:

• You can hand the keys back to the provider and walk away, or 

• You can pick your next brand-new car and agree another lease deal

Don’t worry about getting the car back to the provider. Just remember to put enough fuel into it, and they will come and take it off your hands at a time that suits you. 

An inspection of the car will be part of this pickup, so be sure to check that there’s no damage to it that could be considered beyond fair wear and tear. The car doesn’t need to be in showroom condition.

You don’t need a lump sum deposit to start a leasing contract. You’ll just need at least one month’s worth of the regular lease payments to pay upfront. After this, you pay a fixed monthly fee for the remainder of the contract. Under some contracts you won’t have to pay for repair costs – or sometimes insurance. For this reason it can be a cheaper option that buying a similar car outright.

If you can’t afford to pay your monthly lease payments anymore, you should contact the leasing company you got the car from straight away. Failure to pay can lead to late payment charges.

In many cases you may be able to work out an alternative finance option with your leasing provider. This might include a temporary price reduction until you can afford to pay in full again. But any negotiations regarding the terms of a lease agreement are at the discretion of the lease provider.

It is often possible to extend your lease, depending on the circumstances. An admin fee will typically apply. There are two types of contract extensions: 

• Informal extension: A short-term agreement where the customer agrees to use the car beyond the contract end date under the same terms and monthly price. An informal extension lasts no longer than six months and is generally used to assist the change from one lease deal to another

• Formal extension: A longer extension (up to 12 months) which allows the customer to continue using the car beyond the contract end date, but new agreement terms are drafted. This includes a ‘modifying agreement’ detailing a new monthly payment price, annual mileage and contract length

Provided you can afford the initial down payment and ongoing monthly payments and you’re approved through a credit check, you should usually be eligible for leasing. 

You'll typically need to be 18 or over. 

Businesses can lease a car in the UK, even if they don't have substantial financial history. The firm will need to prove it can afford the monthly lease payments and may be asked to provide documentation, such as bank statements. Read out guide to business leasing for more information.

Despite being able to legally drive in the UK from the age of 17, the minimum age to lease a car is usually 18 years old.

Car leasing is also only possible for 18-year-olds who have enough financial history in order to pass the credit check required for a lease car. 

If you’re a young driver under 24 get hold of your credit report and score for free online before applying to lease a car.

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