Most of us have a good idea of the basics of car leasing; we know that it’s a long-term rental agreement where you pay a fixed fee per month so you can make use of a vehicle for a set time period. With car leasing arrangements, you have the added benefit of being able to choose a vehicle that is often more than you could afford if you were to purchase it or go for a PCP or personal contract purchase, so for those who are keen to drive around in the latest luxury model, a good contract hire or car lease agreement is an excellent choice. But it brings with it other benefits as well, such as lower initial deposits and savings on taxes if you have a business. But what else should you know about the process of car leasing and its benefits? Let’s find out.
The general guidelines for car leasing or contract hire
- A typical contract hire and car leasing agreement is from two to five years.
- You have to go through a credit check, but it will not assess your outgoings and other expenses.
- A standard agreement asks for around three months’ deposit for the lease, payable up-front.
- You will never have ownership of the vehicle during the duration of the lease contract, and you will have to give back the vehicle at the end of the lease term.
- While the monthly payment will sometimes be higher than that of a PCP, you will still pay less during the entire contract than with a PCP.
- You have the option to acquire a maintenance package which can cover aspects like road tax and servicing.
- The contract will usually come with strict conditions and terms such as mileage limits.
The limitations when it comes to car leasing
As with other deals like PCP arrangements, car leasing may come with certain limitations, although they are quite reasonable under the circumstances of the contract. Here are a few limitations outlined below:
- You cannot modify or change the vehicle in any way unless you ask for permission first. You can, however, ask the company leasing the vehicle to make certain modifications before delivery
- If you go over the mileage limit, you will have to settle a penalty fee for the additional miles once the agreement ends. This would normally be 10p for every additional mile. This is thy it’s best to understand your mileage requirements from the beginning; it may be better to go for a higher limit on mileage rather than pay a penalty.
- You are obligated to return the vehicle in good condition and repair, but this takes into consideration reasonable wear and tear as well. If, for instance, the wing or side mirror becomes damaged or broken, you may be charged a fee.
- If you are planning to take the car to another country, you may need permission in writing from the car leasing provider, and this may come with an additional fee as well.
For many, car leasing has proven to be the best choice, not only because it lets them save money in the long-term, but also because it allows for easy upgrades every few years.
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