Essentially, car leasing is the process of renting a car over a fixed time period. You pay a monthly leasing cost and an initial fee up front; once the leasing period is over and done with you simply return the car to the leasing company. A leasing period is generally between one and five years (with around three being the most popular).
So is leasing cost effective?
The price is based around the expected annual mileage you’ll be racking up – your monthly payments are going to be lower if your expected annual mileage is low. Make sure not to underestimate this figure when signing a lease though as you’ll receive an excess mileage fee if you exceed the amount of annual mileage you initially specified.
For an average three-year leasing period you’d pay three months up front followed by thirty five monthly instalments. It’s your personal responsibility to cover any service costs or insurance (though leasing a new car keeps service costs to a minimum).
The cost of running a car is constantly going up year after year, so with that in mind here’s some reasons that leasing a car is an attractive and viable prospect to consider when choosing options for your new car.
Driving a Better Car Becomes Affordable
Generally speaking, the monthly payments on a leased car tend to be considerably lower than purchasing a vehicle on finance. This means that if driving a car slightly beyond what your bank account can stretch to is more appealing than actually owning a vehicle, leasing can be an attractive possibility. You don’t need a great deal of upfront capital either. When purchasing a car, you may be asked to pay a large amount (if not all of the car’s price) up front. If you’re lacking access to large amounts of cash, then the much smaller and more manageable monthly payments of a leased car is something to consider.
The Car is Under Warranty
Leasing is a substantially more worry-free method of driving than actually owning a car yourself. This is because leased cars are covered by parts and labour warranties; the manufacturer is obliged to fix any problems with the car with no cost to you. Ordinarily you’d only be paying for the service costs, but since a leased car is likely going to be brand new, these costs are going to cover basic elements like new tyres or changing the oil. On top of this, you don’t have to take the car to primary car dealers (which are almost always more expensive than other garages), as long as the garage is VAT registered, the warranty is secure.
Depreciation Is Out of the Picture
Despite the fact that the value of the car you’ll be leasing will actually depreciate at the same rate as a car you’d own yourself, you have the option to simply return the vehicle and acquire a new one. An owned car would continue to depreciate whilst finance and maintenance costs need to be paid.
As you can see, leasing a car is a serious option to consider for those exploring new methods of motoring. If you’re looking to acquire a new car, why not begin a lease today?
Christian Goodloe has extensive experience as a business consultant. He is also an avid blogger where he likes sharing his knowledge on business costs. His articles mainly appear on business blogs. Find out more about used car leasing, visit the link.