ANYONE who has previously leased a vehicle will already know the benefits of leasing their next car rather than buying one outright.
If you have never leased a vehicle before you might be surprised at how easy the whole process can be.
Leasing can save you significant amounts of money over the term of the agreement. If you don’t actually buy the car then you obviously don’t have to pay full price for it.
Using a leasing provider also puts every manufacturer in one convenient place. No need for you to go traipsing around the dealerships, trying to shave an extra few pounds off the price tag or squeezing an extra service out of the sales staff.
The main source of any savings comes from the fact that a lease company can deal direct with a manufacturer to negotiate “bulk” discounts based on the potential number of vehicles they could order in the future. These savings can then be passed on to you when you decide to lease the vehicle.
Leasing can also open up a wider market than you may be able to afford otherwise. After all, leasing a brand new Ferrari is considerably cheaper than waltzing into a dealer and handing over a large suitcase stuffed full of used notes.
Not that everybody who leases their vehicle drives an Italian supercar of course. For most people their car of choice is unlikely to be altered too drastically regardless of whether it is leased or purchased.
But how does leasing actually work?
If you have prior leasing experience you will already know the answer to that question. If not you may be pleasantly surprised by how simple the whole process is.
Choose your car ...
Sounds obvious of course, but the first step is to decide what sort of car you would like to drive. There are a wide range of options on the market from a supermini to an SUV, an electric city-car to an enormous V12. Exactly which option is best for you is going to depend on your lifestyle, personal circumstances, and budget.
Most people already have a general idea of what they want. The key advantage of leasing is that a leasing provider can often point you in the direction of a model or manufacturer you hadn’t considered. Think of the leasing provider as a personal shopping service. You give them your requirements, tell them how much you would like to spend each month, and they will come back with a list of possibilities for you to choose from.
Decide the terms ...
Along with the value of the car this is the biggest contributing factor to the monthly cost of a lease vehicle. You need to decide how long you would like the lease to last - usually two to four years but leases can be tailored so don’t be afraid to ask for something different - and how many miles you are likely to travel per year.
This is the part where it pays to be as accurate - and as realistic - as possible.
The length of the lease is important in so much as you need to maintain the monthly payments for the full term. The mileage is more so because if you underestimate it you could find yourself with a hefty bill for the excess at the end of the term.
The higher the mileage at the end of the term the less residual value is left in the car. The residual value is part of the equation that determines the monthly cost of your lease so the fewer miles it has on the clock when you hand it back the less you will pay over the term of the lease.
Promising to travel a maximum of 10k miles per year when you actually do twice that distance may save you money on the monthly payments, but when you hand the car back with double the mileage the leasing company will rightly send you the bill for the difference.
You should also factor in the cost of a maintained contract too. You are responsible for the maintenance of the vehicle while you are driving it. Including the cost of servicing in the monthly payment does simplify your life when the annual service comes around.
Financing the lease ...
It’s a fairly simple rental agreement. You agree to pay a set rental over the period you choose. And then drive away in your new car.
In the back ground this is what happens. When you lease a car the manufacturer understandably still wants to be paid. The leasing company uses finance to buy the vehicle and charges you per month while you are using it. When you hand the car back at the end of the term the leasing company can then sell it to recover the difference between the value of the car and the amount you have paid them.
It’s obviously not quite as simple as that in detail but the general principle holds true. From your point of view the main concern should be the affordability of the monthly payments and ensuring you fully understand the terms of your individual lease. The lease is a legally binding contract so as long as you read the small print, make sure you are aware of your obligations under the terms and stick to them, you will never have to worry about it.
Delivery day ...
Once all the legal bits are out of the way your leasing provider will make all the arrangements for your new car to be delivered to you. All you need do is sit and wait for the knock on the door.
When your car is delivered try to curb your excitement and ensure you check it carefully. It may have been delivered on a transporter or driven to the delivery address but you should always check for any marks, scratches, or damage before signing for it. Make sure all the extra bits like a spare wheel, warranty and service book, first aid kits, and the like are present and correct.
If there are any issues at all you can decline the delivery. If you do notice a minor issue but it doesn’t worry you too much then make a note on the paperwork before you sign to highlight that the issue was there prior to delivery. If there are any issues at all you should also inform your leasing provider immediately.
If your new car was driven to the delivery make a note of the mileage on the delivery note too. Delivery mileage shouldn’t come out of the mileage allowance you agreed in the lease.
Once you’ve signed for the delivery you can transfer all your old CDs, cuddly toys, and assorted mystery bits that collect in the corners of the glove box to your brand new car.
Handing your car back ...
Inevitably your lease will come to an end and you will have to hand back your car. You’ll know exactly when this date is so you will have plenty of time to prepare.
Before the car is collected give it a thorough check for marks and damage, take photos if you are unsure of anything. All leasing providers expect a certain level of general wear and tear over the life of a lease but excessive damage, or scratches that have been left to rust or discolour could prove costly.
If there is any damage that could be considered excessive it will pay to get it repaired prior to the car being collected as this is likely to be cheaper than the bill you will receive if you leave it for the leasing provider to fix.
The British Vehicle Rental and Leasing Association (BVRLA) – the leasing industry’s trade body – provides general guidelines as to what constitutes fair wear and tear. These are freely available and ensure the rules are clear, easily understood, accepted across the industry and fair for everyone involved.
You should also ensure the servicing and maintenance is fully up to date. Leasing providers expect vehicles to be returned to them with a full service history so any gaps could cost money. This is where the maintained lease we touched on earlier comes in handy. Keeping on top of servicing, as well as regularly checking fluid levels and replacing worn tyres, will pay off at the end of the term when you hand back a car in immaculate condition.
If you are planning on leasing a new vehicle you should allow at least three months to process a new agreement and take delivery of the replacement. This will give you plenty of time to ensure your existing car is properly cleaned and checked, to dig the spare key out of the back of the kitchen drawer, and get any repairs carried out before it is collected.
And that’s leasing in a nutshell.
Granted it’s not exactly a small nutshell but leasing a car is a significant financial transaction. It’s always best to know exactly how it works so you can ensure smooth and trouble free leasing.
If you do have any general leasing queries that we haven’t touched on you can always give us a call to clear them up. Likewise, if you know that leasing your next car is the way to go then we’re ready with a long list of cars, one of which has your name next to it.
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