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An essential guide to car leasing

Car leasing can offer a cost effective and convenient alternative to purchasing outright or purchasing through hire purchase or some similar finance scheme for individuals and businesses. Car leasing makes the latest car models accessible to those that would otherwise not be able to afford them. However, shopping for the best car lease deal is vital if you’re to ensure that you’re not paying over the odds for the privilege of leasing, rather than buying your car. In this guide we walk you through what car leasing is and how you can find the most suitable deal for your needs.

What is car leasing?

Leasing a car is similar in many ways to renting a property, you sign a contract and agree to pay a certain amount per month, and, at the end of the period, you return the keys to the property owner.

Car leasing differs from car hire in that it is a long term financial agreement; additionally, there are deals on the market that offer the option of purchasing the car outright.

Types of lease

By now leasing has reached a stage when it stands for several types of related yet different financial deals. These are contract hire, contract purchase, hire purchase, finance lease, personal contract purchase and personal contract hire. One criterion of differentiation is whether you want to eventually own the car or not. Another is whether you want to pay for car use in monthly instalments alone or in combination with the so-called "balloon payment", a lump sum payable in the beginning or end of the lease period. Therefore, when consulting an expert, make sure you already know how you fare on these two basic criteria.

Lease terms matter

Another issue you have to know in advance, along with the car's make and model, is how much you are willing to pay and for what period. What is more, you need to clearly mention if you will be using it for individual or business purposes. Then consider intensity of use. Lease companies need to know what mileage and, respectively, what wear and tear to expect.

The benefits of car leasing

Car leasing means that you don’t have to be concerned with the associated depreciation or having to find a buyer when you wish to change vehicles. It also means that you incur lower maintenance costs as the cars available for leasing are generally relatively new.

Lastly, you are able to change your car (depending on lease term) every couple of years and you’ll never need deal with a car that’s out of warranty again.

Factors to consider when considering your car lease options

Mileage restrictions

First and foremost, you should be aware that certain car lease deals are subject to a restriction on mileage, after which you’ll be charged per mile.

Monthly payments

Whilst your monthly payment will depend on who you lease from, it is mostly linked (in terms of how expensive the lease is) to what model you choose, obviously the more expensive the car, the more expensive your monthly payments will be.

Length of contract, mileage and maintenance

When choosing a lease you’ll have a number of options as to length of contract and how many miles you think you’ll cover; it’s important to consider the latter carefully if you’re to avoid surcharges. You will also have the option of whether you’d like the maintenance to be covered. If your finances are too tight to meet an unexpected garage bill, then you should opt for full maintenance.

Car lease research

When searching for the best deal you should first establish the aforementioned factors; once you have a thorough idea of what you’re looking for you can then go on to ask for quotes.

Car leasing certainly has many benefits and continues to grow in popularity; however you should take care to research the market and ensure that the options you choose are suitable to your ongoing needs.

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You may also be interested in Car Warranty.

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