The beginner’s guide to leasing: Am I getting the most for my money?

 

When financing a car, a key concern is getting maximum value for money. Leasing is a great way for personal and business users to run a new car and regularly update it without the hassles of selling the old one or having to engage in protracted negotiations with a dealer, often at lower monthly payments than other types of financing.

 

Leasing in a nutshell

When leasing a car, you effectively have the use of it over a set period of time in exchange for regular monthly rentals and an initial rental; this will be certain multiples of the monthly rental – usually three, six or nine months.

You select a mileage limit for the duration of the lease; the higher the mileage, the higher the monthly amount.

You choose a car just as you would if purchasing it outright, such as selecting your chosen colour and optional equipment or electing to take something from available stock. You deal direct with the leasing company who source the car for you, set the lease up and organise delivery.

 

At a glance convenience

Most leasing companies put full details of current leasing deals on their website and enable you to ‘tweak’ variables such as length of agreement, amount of deposit and car spec so you can tailor a lease suitable for your needs and budget.

Straight away you can see what you’re getting for your money. You can either focus on a specific car model and adjust specs and other variables to arrive at your preferred monthly budget, or search based on what makes and models are available within that budget.

Another method is to see what models from a specific make fall within your budget. For example, if your heart is set on running a prestige car such as a Mercedes you can see what model your monthly budget could get you.

Sometimes there may be special deals available at certain times; for example, cars usually available with option packs may have one or two ‘bundled’ as part of the monthly amount.

 

Hiring not owning

Some may wonder if leasing is the best value for money option as you don’t own the car at the end unlike other forms of purchase finance such as hire purchase or bank loans.

Firstly, you have had the use of often a higher quality car than you may have been able to fund using other methods since leasing payments tend to be less than other forms of finance.

Secondly, while someone financing to purchase may finally own the car at the end of their payment term, it will likely have cost more per month than a lease over the same period. There’s also the major cost of depreciation.

The car financed through a purchase method will likely have lost the majority of its value new during the length of the agreement, but payments will have been fixed based on the original price paid. Cars depreciate at different rates depending on make and model.

 

Leasing to keep up to date

Yes, someone purchasing a car will own it at the end but they also face keeping an ageing car that may have been eclipsed by more modern models and may start costing more in its upkeep.

The person leasing, on the other hand, can choose another new car therefore staying up to date and knowing where they are with a fixed monthly rental, on a car likely to be under manufacturer’s warranty throughout the term of the lease.

 

 

 

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