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Understanding Your Lease Contract

 Published 21st May 2018
General Guides 

What's not to like about leasing? You can drive a better car than you may otherwise be able to afford. You can replace your car more frequently. You don't have to worry about maintenance - assuming you opt for a maintained car lease - and you can get all of that for a fixed, affordable monthly rental.

Effectively a lease is a long term rental. You agree to pay a monthly fee for an agreed time period and in return you get full use of the car. At the end of the term you hand the car back and the contract ends.

You can tailor a lease to suit your circumstances and requirements so in effect every single lease is a unique agreement. That being said, the basic premise applies to every lease regardless of the specific details so in many ways it really is that simple. Although it pays to be aware of the finer details.

Your lease could last up to 5 years and you will be responsible for making those monthly rental payments for the duration. Before you take out a lease you will need to undergo a credit check before the lease company agrees to leasing you the car. Unfortunately this won't take into account your ability to afford the monthly rental payments so you need to be confident you can maintain that payment for the duration of the contract before you sign. You should be aware that it may not be possible to get out of a lease deal early without paying up the contract in full so make sure you understand the terms just in case. If you do find yourself struggling to meet lease payments the most important thing is to talk to your lease provider so they can help.

Unlike a Personal Contract Purchase where you can make a balloon payment at the end of the term, with a lease deal you won't have that option to keep the car. Given that around 4 out of 5 purchase agreements end with the car being handed back it may work out more cost effective for you to lease anyway. If that's the case then a lease deal will probably cost you less in the long term. If you want the option to keep the car a lease isn't for you.

There are restrictions on what you can and can't do with a leased car. The main one is the agreed mileage over the term of the contract. If you exceed the agreed mileage the lease company will charge you for the excess, and this could quickly become expensive. Obviously you don't want to go generous on your mileage terms just to make sure you don't incur excess mileage payments – after all there is no point paying for mileage you are never going to use.

But you should be aware of this – ask your lease provider for guidence if you are unsure.

You also need to ensure you return the car in good condition – because you don't own the car, the finance company does. If you've been driving a car for three years it is bound to suffer the odd paint chip or bumper scrape. That sort of thing is covered under ‘fair wear and tear' and won't be taken into account when the car is inspected. But the wing mirror stuck on with gaffer tape from the time you clipped it against a parked car and the deep scratch starting to show signs of corrosion won't be forgiven quite so readily. The golden rule is, if it's damaged assume it's cheaper to get it done yourself before you hand the car back.

Apart from that you can pretty much treat it as you would your own car, with a few little provisos. You can't modify the car without permission so if you want a tow bar it's best to have one fitted before you take delivery rather than amend the agreement at a later date. You should also be aware that you may need permission to take a lease car out of the country. If you're planning a trip to the continent double-check with the lease company before you go – you'll need the VE 103 form. The last thing anyone needs is to have to try and explain to a foreign police officer that you don't have the necessary documents to take your car on holiday.

If you have any questions regarding leasing, or have already decided to lease your next car, the best course of action is to speak to the experts. Which is where we come in. Our team understands the pros and cons of leasing and can talk you through the process to ensure you get the best deal to suit your exact requirements. All you need to do is pick up the phone and ask.

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