Car leasing explained

Date: February 2016, Category: car finance, Author: Dan Lewis

Car leasing explained


Is car leasing the right choice for me?

Let’s face it – everyone likes a brand new car!  With vehicle leasing becoming increasing popular for business and personal users – we thought we would give some pointers on the subject.

Initially, try asking yourself the following questions:

  • How much did you spend on your last car?
  • How long did you keep it?
  • How much did you sell it for?

The questions above will help you identify the true cost of owning your last vehicle and may help you decide ultimately whether leasing is right for you.

This simple equation will help you identify the true cost of your last vehicle:

How much it cost – how much you sold it for, divided by the number of months you owned it….  Done it?

The equation above does not take into account road tax – so add that on, and of course if you bought it on finance, the cost of interest needs adding… oh, and the cost of servicing and any maintenance…….ready to give up?  To compound matters, if you part exchanged the car, spent money on advertising, wasted time, and all the hassle, you may quite simply ask yourself…

“Why would I ever want to do that again?”


Contract Hire and Personal Contract Hire (PCH)

One of the more popular methods of leasing is Contract Hire (including Personal Contract Hire), which is available to both business users and private individuals.

Contract hire allows the customer all the benefits of a new vehicle – without actually owning it.  The process is quite simple.  Choose a car, choose a suitable mileage allowance and decide how long you wish to keep it.  From there our leasing company will provide you with a quote.  From that point – you simply pay a monthly fee to use the vehicle for the contracted term.  Simple!

Contract Hire can be simple and very cost effective way to fund a vehicle, or fleet. You are not restricted to the vehicles you see in the special offers either – you can literally choose any new car or van and obtain a quote.

Benefits Of Contract Hire

  • It offers off balance sheet funding
  • It is a VAT efficient way of operating a company car
  • It provides fixed / predictable motoring costs for the contract term
  • Maintenance Plans are available (which cover general maintenance and servicing costs)

At the end of the hire period, you simply hand back the car – and assuming you have not exceed your annual mileage allowance, or damaged the car in any way – that’s it.  If you do exceed your mileage allowance – an excess mileage charge is applied.  This will be calculated per mile at the start of your contract.  From there – you simply choose your next car!


Steven Colwell