In today’s market, the allure of buying a brand-new car has lost its shine. It’s the second largest financial commitment you can have, only usurped by buying a house. With that, you run the risk and have the burden of keeping it in ship shape after tens of thousands of miles on the clock.
However, leasing is a great way of being able to drive a new car without the major expense.
If you’ve heard about car leasing and are interested in what it has to offer, but perhaps unsure about the details, this article will give you a roundup of everything you need to know.
A personal lease is essentially a long-term loan contract for a brand-new car. You get full use of the car for a set amount of time and mileage, and in return, you pay a monthly fee and sometimes an upfront deposit. Because it’s a new car, you won’t have to worry about an MOT test for 3 years, and some leasers include road tax as part of the deal. Insurance is not included.
Business leases are very similar to personal leases but are, as the name suggests, only available to businesses. Furthermore, business leases strictly limit the use of the car to work purposes, so if you are looking for a company car that doubles up as a family run-around, it may be best to go with a personal lease instead.
Let’s look at the key parameters you need to consider when searching for a car lease.
Term Length
The term length is the length of the lease contract. The most popular lengths are 12-month, 18-month or 24-month contracts, but more extended contracts of up to 48 months are available.
Once the contract length ends, you simply return the car to the lease dealer, and are free to choose another lease should you wish to.
Initial Deposit
Perhaps the most important factor in the search for a car lease, the initial deposit is the upfront fee that you pay the lease dealer to secure your agreement to the lease monetarily. This is usually done with an advanced payment of a set amount of months. For example, paying 3 months-worth of the lease in advance, and then once that time has elapsed, returning to the normal monthly payment.
Longer leases often have larger lump sums of up to 12 months, but there are many deposit-free leases out there that simply negate any advance payment, which can be great for those who are unable to or uncomfortable with parting with such a great deal of money all at once.
Annual Mileage
Car leases are based on a fixed amount of mileage. Because you don’t technically own the car, leasers are keen to ensure that their vehicle does not come back with hundreds of thousands of mileage on the clock, which likely means it is in a drastically different condition.
To navigate this, all lease contracts have an annual mileage range that the customer must not exceed, else they will suffer an extra charge for each additional mile travelled. This can prove to be quite a costly mistake, so before you set out on the search for a lease, it’s best to calculate a rough estimate of how much you believe you will travel in a year. It’s always best to have too much annual mileage on the contract than too little!
