An Idiot’s Guide to Car Leasing
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Facts About Leasing
Car leasing is probably a term you've heard banded around a lot recently, especially if you're in the business of looking for a new car. The problem is, many people get confused simply because there are so many different synonyms associated with leasing which all essentially mean the same thing. I had the same problem 6 months ago when looking for the right finance plan to purchase a new car.
Going from garage to garage I was offered car leasing, personal contract, hire purchase, personal contract hire purchase and many other combinations of these individual words, combined with other jargon, this only served to confuse me even further about the intricacies of this finance method. Here are the plain simple facts about leasing:
Leasing is akin to renting a car
A deposit is usually required
Payments are made monthly over a set period, usually 2-3 years
Going from garage to garage I was offered car leasing, personal contract, hire purchase, personal contract hire purchase and many other combinations of these individual words, combined with other jargon, this only served to confuse me even further about the intricacies of this finance method. Here are the plain simple facts about leasing:
Leasing is akin to renting a car
A deposit is usually required
Payments are made monthly over a set period, usually 2-3 years
Clarification
To clarify, there are many different names for leasing, but they all mean the same thing, what does differ is the details of each agreement, depending on where you decide to purchase from. Dealerships do offer lease plans on most new cars these days, but there are also specialist companies that only offer lease vehicles.
It pays to shop around and find the best deal, and a bit of light bartering never goes amiss but generally, specialist leasing firms offer more attractive deals than manufacturers. Typically a deposit will be paid, usually ranging from around £500-£5000 depending on the value of the car, before monthly payments commence.
It pays to shop around and find the best deal, and a bit of light bartering never goes amiss but generally, specialist leasing firms offer more attractive deals than manufacturers. Typically a deposit will be paid, usually ranging from around £500-£5000 depending on the value of the car, before monthly payments commence.
Extras
If you want extras on your car like leather seats, air conditioning or sat nav, you have the choice to pay for these as part of the deposit, or in the monthly payments, though if you don't plan on keeping the car this could prove to be a big waste of money. You should also consider gap insurance, a type of cover designed specifically for lease cars that will recoup your losses if you happen to write the car off during the lease period.
You should also be aware that most lease vehicles have a set mileage limit, this can be increased, which means a bigger deposit and a lower Guaranteed Future Value or GFV (the amount the car is forecast to be worth at the end of the lease period). If you plan on buying the car after leasing, this makes little difference, if you plan to ditch it however, it is another added cost.
You should also be aware that most lease vehicles have a set mileage limit, this can be increased, which means a bigger deposit and a lower Guaranteed Future Value or GFV (the amount the car is forecast to be worth at the end of the lease period). If you plan on buying the car after leasing, this makes little difference, if you plan to ditch it however, it is another added cost.
What To Expect At The End
At the end of the lease period you can any of the following:
Give the car back
Pay the Guaranteed Future Value (usually equivalent to around half the value of the car) and keep it
Claim any amount that car proves to be worth over the GFV in equity, and use it as a deposit on another car (from the same dealership)
Leasing represents a hassle free way to finance a car, meaning you needn't suffer the huge depreciation associated with buying. It also makes cars that would have been out of your 'outright buying' budget far more accessible, which explains its popularity with younger drivers.
If you are interested in van leasing you should check out Crusader Vans
Also make sure you check out my predictions for the 2011 F1 season
Give the car back
Pay the Guaranteed Future Value (usually equivalent to around half the value of the car) and keep it
Claim any amount that car proves to be worth over the GFV in equity, and use it as a deposit on another car (from the same dealership)
Leasing represents a hassle free way to finance a car, meaning you needn't suffer the huge depreciation associated with buying. It also makes cars that would have been out of your 'outright buying' budget far more accessible, which explains its popularity with younger drivers.
If you are interested in van leasing you should check out Crusader Vans
Also make sure you check out my predictions for the 2011 F1 season
by ryantoms
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