Leasing a vehicle is basically a form of long term rental. You pay a certain monthly amount to have use of a vehicle for a set amount of time. It is usually cheaper than hire purchase or a credit agreement, and when the time is up you simply give it back. Sounds easy right? While it is a straightforward process, there are a few things to keep in mind to make sure that you are getting the best deal you can, and are not being overcharged.
Residual value
The residual value is a calculation of what the car will be worth at the end of the lease. Broadly speaking the car company will take the value of the car today, less the residual value and divide that total by the lease term. To find better deals look for vehicles which will hold more of their value in the future. This means that their residual value will be higher which will result in lower monthly payments.
Lease terms
The first thing to consider is the lease term – how long you would like to use the car? Most terms are around 2-3 years, but some are longer. You may think that longer terms offer cheaper monthly payments but this is not always the case. The longer you have the car the more it will have depreciated in value when you hand it back which can actually make the payments higher. Alternatively, a company may offer a longer term without making it obvious in an attempt to make the monthly payments look smaller. Make sure you double check the term length carefully before committing yourself.
Down payment
You may think of this as a deposit, but technically it’s not because you don’t get the money back when you return the car. It should be considered as an initial payment. Keep in mind that the higher down payment you make the less the monthly costs will be, and vice versa if you would prefer to make a lower down payment.
Mileage
Mileage has a big impact on residual value, and the greater the number is the less the car will be worth at the end of the term. Mileage is agreed at the beginning of the lease so think carefully about what your realistic use will be. You don’t want to overestimate and end up paying for the value of the mileage you don’t use. You especially don’t want to underestimate to try and decrease the payments because you will end up paying extra for each additional mile you make.
Find the best car leasing deals
A car lease is a long term commitment and getting something wrong can cost you money. One of the best things to do is to get help from a professional and use a UK car lease broker like Intelligent Car Leasing. They will be able to guide and advise you through the process to make sure that you get the best deal on a car that you love.
