What is car leasing and how does it work?

When it comes to getting a car, leasing has become quite a popular choice in recent years, with more people choosing this method over buying a car outright. But there is still some uncertainty around what leasing a car involves. If you’re considering leasing a car but not sure where to start, we’ve put together this simple guide to help you understand.

What is car leasing?

First you need to choose a car to lease, then you pay a deposit which is usually the equivalent of a few monthly instalments and then you pay the fixed monthly payments until the contract ends. The length of the agreement is usually between two to four years but it is entirely up to you and how long you actually want the car for.

Leasing a car usually means that road tax and breakdown cover is included, sometimes servicing is too. It’s a great option if you are looking to get a brand new car as it’s usually the lowest upfront and monthly cost.

What happens at the end of the lease?

With leasing you never own the car at any point and you don’t have the option to buy it either, which could be a downside. When the agreement has come to an end, you have two options; you can either extend the lease or give the car back to the finance company. You will need to get in touch with them prior to the agreement ending so you can discuss your options further.

If you choose to give the car back and the car is damaged in any way, you will be charged for the repairs as the finance company will want it back in a sellable condition. It’s worth noting that if you’ve gone over your mileage limit during the agreement, you will also be charged for this.

Is leasing cheaper than buying?

There are many factors that influence whether it’s cheaper to lease or buy a car and it really comes down to the individual’s circumstances. With a leased car, the monthly payments are low and you could be driving a brand new car that you might not have been able to afford.

If a car retains its value, it will be better to buy as you’ll have a valuable asset in a few years. There are websites you can use to estimate how much your car will be worth on the second-hand market to help you decide if it’s worth buying or leasing.

Hopefully this post has given you some insight into leasing a car and whether it is more beneficial for you than buying a car. If you’re still uncertain whether leasing a car is the best option for you, it’s best to speak to a respectable car dealership who will be able to provide you with further information.