• Personal Leasing

How Personal Leasing works

Thanks to low monthly payments, no depreciation risks, and the option to include fixed-cost servicing and maintenance, leasing is rapidly becoming one of the most popular forms of personal car finance.

Traditional Hire Purchase or Personal Contract Purchase (PCP) agreements are based on the full cost of the car. This is either paid in full during the contract, or through an optional final balloon payment at the end.

Personal Leasing, which is also known as Personal Contract Hire or PCH, works differently because the car is ‘hired’ to you for a set period of time (normally 2 – 4 years) and at the end of the contract, you simply hand the vehicle back and choose a new one or walk away.

The amount you pay each month is based on the length of the contract, the number of miles driven, and the likely resale value of the vehicle once it is returned. Road Fund License, otherwise known as road or car tax, is included and you also have the option to pay an additional monthly amount to cover the cost of routine servicing, maintenance, and wear and tear based repairs. Usually, this includes replacement tyres as and when required. 
Given the recent cost of living crisis caused by spiralling inflation, the ability to fix your motoring costs for up to four years is one of the most attractive benefits of personal car leasing. You can also opt to include UK-wide breakdown cover for added peace of mind.

Things you need to know about Personal Leasing

It’s important to be realistic when setting mileage limits, as exceeding the agreed level will result in a pence-per-mile charge that’s designed to cover the likely drop in resale value. 
Keeping the car in good condition is also important, as damage which goes beyond what the British Vehicle Rental and Leasing Association (BVRLA) has outlined as fair wear and tear will incur additional costs. Many people find that getting the vehicle repaired before returning the vehicle is the best way to keep costs down.
It’s also worth remembering that although it is sometimes possible to purchase the car at the end of the contract, you have no contractual right to do so and the price of the vehicle may be higher than you wish to pay.

Is Personal Leasing right for me?

While personal leasing often means less risk and lower monthly payments, whether it’s right for you largely comes down to your view of ownership. 
If you have any questions about how personal leasing works, or to get a personal quote, just give us a call on 01785 713657 and we can talk it through.