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Car Features


The Pros and Cons of Personal Car Leasing

27 Sep , 2015  

Choosing the car that best suits your present situation isn’t easily, but it’s only half the battle. Once you’ve selected a model, colour and any optional extras you wish to have fitted, there’s the challenge of deciding just how you’re going to pay for it.

Traditionally a bank loan has been the go to choice for those who don’t have the capital to pay for a car in one hit. These days a type of leasing, also know as Personal Contract hire (PCH) is proving to be one of the most popular options.

This option can prove especially great if you have other big financial commitments and relish the idea of driving a new car, whilst having a single fixed monthly payment and aren’t bothered about actual vehicle ownership.

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However, leasing isn’t always the best option and as with any type of finance there are both pros and cons. To help you decide if it’s right for you, we’ve researched the biggest pros and cons so that you don’t have to, and here they are.

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The Pros 

  • Fixed Monthly Payments – The fixed monthly payments aspect of personal leasing allows you to easily budget your monthly motoring expenses. For example, if you opt for personal leasing with All Car, you will be given a choice of whether or not you wish to include maintenance, replacement tyres and servicing, but also road tax.
  • Depreciation Beating – With personal leasing there’s no need to worry about the big financial hit that depreciation can be. For example, if you owned a new car outright, you could loose thousands to depreciation in the first year alone. By year three it could be worth just 40 per cent of the price you paid for it new, that’s a staggering 60 per cent drop in value.
  • Brand New Car – A key benefit with leasing is that fact that it can enable you to jump behind the wheel of a shiny new factory-fresh car, the kind of car that you might otherwise be unable to afford.
    How is this possible? It’s all because of the way a personal leasing deal is worked out, essentially it results in lower monthly payments than you’d have if you we’re buying a car outright via a bank loan.
  • Hassle Free Disposal – When you own a car and decide it’s time change, you will have the hassle of either part exchanging or selling your old car. With leasing, once you reach the end of the agreement you simply hand the car back and are then free to choose a new car on a new lease agreement.

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The Cons

  • No Car Ownership – A car leasing agreement is a little like a long-term rental agreement, you pay month in month out for a number of years and at the end you will have nothing to show for it. It’s essentially dead money.
  • Long-Term Commitment – When you own a car outright, you’re free to chance as and when you wish. With leasing you will be tied into an agreement for a number of years, usually between one and five. Changing vehicle or cancelling an agreement mid-term could be costly to say the least.
  • Restrictions Apply – Most leasing companies impose restrictions on what you can and can’t do with your vehicle. For example, modifications are usually a no go, with the exception of tow bars and other minor additions. You will most likely have a mileage cap too, exceeding this can be costly as overage is often charged as a cost per mile.
  • Upfront Payment – When you first enter into a PCH leasing agreement, the chances are you will be asked to pay an amount upfront, this is non refundable and often equates to between three and six monthly worth of payments.

 

Disclosure

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Hey, we have to pay for the running of the site somehow. So this post, whilst being superbly written and informative is a paid for article.


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