Benefits of car leasing

Do you love driving new cars but hate shouldering the cost of depreciation? If so, leasing could be the perfect fit for you.

Leasing is a popular and practical way to drive a new vehicle without all the expense of owning it.

Modern vehicles are safer, more fuel efficient, and more comfortable and enjoyable to drive and travel in, but only a small percentage of people can afford to buy a new vehicle outright; for most, the prospect of purchasing a new car outright remains a distant dream.

That’s why leasing is an attractive alternative, making the luxury of driving a new vehicle an attainable reality for many.

In this article, we’ll learn more about how car leasing works and answer the question, ‘What are the benefits of leasing a car?’ 

What is car leasing?

Leasing is essentially renting a new car for a set period in exchange for one upfront payment and an agreed-upon monthly cost.

A wide variety of cars are available to lease, from flashy sports cars to large, practical, family SUVs.

Lease deals come in as many different shapes and sizes as cars, so it’s possible to identify a lease deal that caters to virtually any budget or requirement.

At the end of the lease deal, you can either exchange the car for a new one or simply hand the car back.

Compared to traditional financing options or bank loans, leasing is a more cost-effective way to enjoy a new car.

Who can lease a car?

To qualify to lease a car in the UK, most leasing companies require individuals to meet these fundamental requirements:

∙You must be at least 18 years old.

∙Possess a full, valid driving licence.

∙Pass a credit check.

When you enter into a lease, you enter a binding financial agreement, so you must be capable of handling the monthly repayments on time and in full.

As a result, most leasing companies will require proof of stable employment and evidence that you can comfortably afford the monthly payments.

To assess your suitability, you must complete and pass a credit check before qualifying to lease a car.

A credit check provides the leasing company with some insight into your employment status and history and your finance history over the past six years, providing them with security and assurance that you are a good candidate for leasing and can comfortably make the repayments.

If you have a poor credit score, it’s at the discretion of the finance company whether or not they choose to lease to you.

Some car leasing companies may still accept you if you agree to make a higher initial payment and higher monthly payments or if you can provide a guarantor.

In addition to passing a credit check, most leasing companies will also need you to provide proof of your address and income before granting you a lease.

Those with major driving offences may also find getting accepted for a lease deal more difficult.

What are the benefits of leasing a car?

According to Fintech Market, more than 1.6 million UK drivers lease their cars, and about 20 to 30 per cent of new vehicles are leased.

With such a large proportion of UK drivers driving leased cars, if you’ve never leased before, you’re probably asking yourself, ‘What are the benefits of leasing a car?’

The are numerous advantages of leasing a car over buying one.

Let’s explore the key reasons why car leasing continues to grow in popularity:

• Experience the luxury of driving a brand-new car – Leasing allows you to drive a brand-new car equipped with the latest technology and safety features, giving you a comfortable, reliable, and enjoyable driving experience.
• Enjoy all the mod cons – Brand new modern vehicles often come equipped with cutting-edge technology that makes travelling a more comfortable, enjoyable and safe experience. State-of-the-art infotainment systems, keyless entry, and advanced driver-assist technologies often come as standard in new lease vehicles.
• Pay one affordable, fixed monthly cost—You are usually required to pay a one-off cost at the start of the lease, after which you pay just one predictable fixed monthly cost, making it easier to budget and manage your finances.
• Avoid the cost of depreciation – According to the AA, if you drive 10,000 miles a year on average, the average car loses around 60% of its value by the end of its third year. When you choose to lease instead of buy, you can enjoy the benefits of driving a brand-new car, without worrying about the depreciation cost. You never own the car, so the leasing company will bear the cost of depreciation, not you.
• Change cars regularly - If you get bored of your car quickly, leasing is the ideal option for you! Lease deals typically last for a few years, giving you the flexibility to switch to a new car and ensuring you always have access to the latest models.
• Affordable down payment – The initial down payment for a leased vehicle is often considerably less than the deposit required for purchase finance, making it more accessible to a broader range of people.
• Minimal maintenance costs – Because you are leasing a brand-new car, maintenance and servicing costs are usually minimal. You may also wish to add a maintenance and servicing package to your lease agreement for convenience and peace of mind.
• Less hassle – Leasing a car takes much of the administrative burden off your shoulders, as the lease company handles most of the paperwork and upkeep. Many lease deals cover things like warranties, breakdown cover, road tax, and MOTs, and there’s no need to worry about selling your car once you’ve had enough of it either!

Important things to remember when leasing a car.

As we’ve just heard, leasing a car has many advantages, but it’s important to weigh up both the pros and cons of leasing a car before you decide which option is right for you.

It’s crucial to remember that when you lease a car, you enter a binding financial agreement.

You should always ensure you fully understand the terms of the agreement before signing on the dotted line; as with any binding agreement, breaking the terms of your lease could result in significant penalties and even legal action.

Here are a few points to consider when deciding whether car leasing is the right option for you. 

• You will never own the car – One of the most significant things to remember is that you will never actually own a car if you lease it. At the end of the lease deal, you must exchange it for a new one or hand it back. You don’t get anything back at the end of the agreement.
• Damage penalties – Whilst most warranties cover mechanical elements, so you don’t need to worry about these, if you cause any damage to the car, like cosmetic bumps and scratches, you will need to pay to have these repaired before you hand the car back or you will be charged for the damage.
• Mileage restrictions – Most lease agreements come with a mileage cap, limiting the number of miles you can drive during the lease term. Exceeding this limit will result in additional charges, so it’s important that you accurately estimate your annual mileage before entering into the contract.
• Early termination fees – If, for some reason, you can no longer afford the monthly repayments or no longer want the car, early termination will result in financial penalties and could impact your credit score. Always read the terms of your lease agreement carefully, make sure you’re prepared to commit to the entire lease term and understand the consequences of early termination. 

Is car leasing right for you?

Ultimately, the decision to lease a car is a personal one.

As we’ve learnt, there are many pros to car leasing. Many people choose to lease because it enables them to drive the latest car models without any long-term commitment or huge upfront expenses.

However, lease arrangements do come with mileage restrictions, and you’ll never actually own the car. If you have a bad credit rating, you may also find it more difficult to obtain a competitive lease deal.

To determine whether leasing is right for you, you should consider your budget, average annual mileage, credit rating, and circumstances.

For many people, the decision largely comes down to their personal preferences – how important is it to you to drive a new car and would it bother you that you did not own the car?

Get a great deal on car leasing with LetsTalk Leasing

LetsTalk Leasing is an independent online leasing company offering customers the best prices on new car leases.

When you lease a car with us, we will make the process as simple as possible by being transparent with our fees and providing a straightforward service. 

Discover the special car leasing offers we currently have available.

For more information about our services, contact our team of friendly advisors by calling 0330 056 3331 or emailing contact@letstalkleasing.co.uk