What Is Car Leasing?
If you have never leased a car before and want to find out about the process, read on to learn everything you need to know
Leasing a vehicle is a great way to drive a brand-new car without having to spend thousands of pounds in one go. It's also a good option if you are looking to avoid the headaches of depreciation and sell-on values later down the line. So if you've ever found yourself wondering what contract hire is (or "leasing" as it's also known) read on...
What is leasing?
Car leasing essentially means you ‘rent’ a brand-new vehicle, making fixed monthly payments for a set period of time and an agreed mileage. When your contract ends, you return the car.
Leasing a car is an incredibly popular choice for personal and business customers, as it’s a cost-effective way of driving a new car or fleet every few years. With no large deposit required and fixed monthly payments, it is an affordable alternative to purchasing on finance or buying.
How does leasing a car work?
In essence leasing means you can use a certain vehicle for a fixed period of time for an agreed sum of money, which is normally paid back in monthly installments.
In a similar fashion to renting, leasing is a bit like borrowing a car - but where you might only use a rented vehicle for a few days at a time, a lease enables you to use a car for anything from a couple of years to up to 180,000 miles.
Monthly payments are fixed and once the contract is up, you simply hand the keys back to the finance company. Easy!
- Tailored to you: Simply let us know your preferred contract length, annual mileage and the amount you'd like to pay up front (or initial rental cost) and we'll find you the perfect package.
- No hidden costs: You'll pay an initial rental, which is a larger portion of the overall rental cost, paid at the start of your contract. The remainder is divided equally per month, over the length of your lease. Simple!
- One monthly cost: The monthly sum you'll pay is determined by the car's depreciation during your contract. This is calculated by the miles you'll do and the car's age when you return it.
- Simple, easy and quick: Following a straightforward credit check, most individuals can secure the car they want, arranging the finance, and any other optional extras with a dedicated account manager.
What’s included in a car lease?
When you agree to lease a car with Leasing Options, not only do you get to drive a brand-new car, but the following is also included at no extra cost:
- Free UK mainland delivery to your door
- Road tax
- UK Manufacturer’s Warranty
- 12 Month Breakdown Assistance
- Part exchange
6 Steps to finding your new car
At Leasing Options, we follow six simple steps that make it easy for our customers to lease a car.
Step 1: Find your future car
We make it easy for our customers to browse our website and choose a car. You can set the parameters for the search by:
- Body type
- Special offers
- Detailed search, e.g. fuel type
- In-stock vehicles
You’ll get a full list of cars to choose from, and we have a dedicated team that ensures you get the best possible price. You can start your search here or keep reading to learn the next steps.
Step 2: Get a quote
Once you’ve identified the car you want to drive for the next few years, you need to decide on some important details that will help us put together a quote for you. This includes choosing the:
- Length of the contract
- Maximum mileage for the duration of the lease
- Extras you want to add on, such as factory options, specifications or a maintenance and insurance package.
This can be done quickly and easily on our website, or by contacting one of our expert Account Managers who can guide you through the process on the phone, while answering any questions you may have.
Step 3: Apply for finance
As with most finance options, you will be required to pass a credit check. This is to ensure you can pay for the monthly instalments for the full duration of the contract.
Once you have completed the finance proposal form, we then send it to one of our globally-recognised financial partners who will take a look at your credit history and make a final decision. We are fortunate enough to have access to the largest number of finance options in the marketplace to assist in funding your next vehicle.
Step 4: Place the order
If you have successfully passed the credit check it is now time to finalise the deal and to get things ready for you to receive your new car.
A dedicated Account Manager will put together your order details, which will contain all the contract particulars, along with information about the car you have selected.
Your Account Manager will check through the order carefully; we also encourage all customers to do the same before accepting it. After this, the order is complete.
Step 5: Sign the finance documents
With the order for your car now completed, the penultimate step involves signing the financial documents. Where possible, your Account Manager will send these to you via email so they can be reviewed. Once signed, we process the contract.
There will be a two-week cooling off period that gives you time to decide that you are happy with the finance agreement, before the car is physically delivered to your chosen address.
Step 6: Delivery
Now all of the paperwork is out of the way, and it is now simply just a case of waiting for your brand-new car to arrive.
During the ordering process we will be able to advise on how long your delivery will take. If the car is in stock, this means it can usually be delivered within a couple of weeks. Vehicles that aren’t in stock can take a little longer to deliver, depending if they are in shipping or at the factory.
We will ensure to keep you in the loop regarding delivery dates, so you know when to expect it and the date to start your insurance cover from.
Can I trade-in my existing car?
With Leasing Options, you can trade-in your existing car when you take up a lease deal. See more about our part-exchange service to see how easy it can be to get more money towards your new car.
This is a simple process that helps you to secure a fair price for your existing car that you can then use as the initial payment on your new one. All we need is your registration and contact details to give you an instant valuation.
If you like the look of the offer, you can accept it there and then, and one of our part exchange partners will get in touch to discuss the next steps.
Collection will be free, and if it makes things easier for you, we can even collect your old car on the same day your new car is delivered.
The payment will also be transferred to your bank account the same day as the collection, so it’ll be with you ahead of the initial payment (which will be 7-14 days after you take delivery of your new car).
What happens at the end of the contract?
At the end of the contract, you simply return your car to us.
Here’s what happens:
- We’ll arrange a free collection to anywhere in mainland UK.
- There will be a fee if you exceed your mileage limit, which is agreed to at the beginning of the contract. However, this could be as little as 5p per extra mile, so isn’t as much as you might think. We explain the excess-mileage charge when you place your order, so there won't be any nasty surprises!
- You are also responsible for ensuring the vehicle is returned in a legal, roadworthy condition. It must be free from any internal or external damage, apart from fair wear and tear, which will be fully explained ahead of signing your contract. You will have pay if any damage has been caused by negligent behaviour, poor treatment or an accident.
- Then, you can walk away or take up another lease deal for your next new car.
Usually when you lease a vehicle with us, you're responsible for the car's maintenance just as if you owned the vehicle yourself. However, with our optional Vehicle Maintenance, we can take care of your car's servicing throughout the time of your lease.
Your finance company's 24-hour assistance team is always here for you - meaning you'll be covered for breakdowns, punctures, services and replacement tyres around the clock. And that's not all - depending on the approved service centre used, a courtesy car can usually be provided while your vehicle is off the road.
What’s the difference between personal and business leasing?
There is no major difference between personal and business leasing. In both cases you are paying monthly instalments to ‘rent’ the car for a fixed period. The cost of the contract is calculated using exactly the same process.
However, one major advantage businesses have with leasing is their ability to claim back VAT. For example, VAT registered businesses can claim an element of VAT on both monthly payments and the initial down payment. There are also extra tax incentives based on Co2 emissions, which encourages business owners to drive eco-friendly vehicles on the road.
As always, we would advise any business to seek tax advice for clarity. Make sure to read our guide to business leasing if it’s something you’re considering for your employees.
Now you know what car leasing is and how the process works, but if you’re not completely convinced, see more about the benefits of leasing. Or check out the rest of our advice for anything else you need to know.
Tips for first time car leasing
Here are some helpful tips for anyone who is considering leasing a car for the first time.
Choose the right vehicle
Pick the right car that suits your needs and lifestyle. For example, if you are single and want something compact, then look for something that ticks those boxes. Anyone who has a partner and children could look at family cars like SUVs, due to having more space. Or, if you are environmentally conscious, consider the fuel-efficiency of the car and its emission rate. You should also think about how many doors you want it to have and engine type too. Covering as much as possible will make it easier to find the right car for you.
Work out a budget
Once you know the car you want, you have to figure out what you can afford. Look at your monthly incomings and outgoings to see what can be spent without overstretching your finances. Most deals last 2-3 years, so you have to be completely sure you can commit to a long-term payment plan.
Consider the initial payment
You will be asked to pay either three, six or nine months’ worth of instalments upfront, known as the ‘Initial Rental’ which will also help lower the overall monthly payments. Consider how much you can afford to pay initially and commit what you are comfortable spending, and nothing more.
Estimate your mileage
If the car is returned at the end of the lease with more miles on the clock than stipulated in the contract, you will be asked to pay the difference. Think about your driving habits and if the mileage limit is one you can realistically keep to throughout the duration of the lease. The cost for additional mileage can start from as little as 5p per mile, depending on your contract. We will provide this figure before you order the vehicle.
Consider GAP insurance
While you will have to get comprehensive insurance, it may be recommended that you also consider taking out GAP insurance. This covers the ‘gap’ between your insurance coverage and the valuation of the car, should it be written off, or stolen during the lease term. In the event of the very worst event taking place, it will mean you are completely covered and not stuck in a potentially huge financial hole.