Car leasing is becoming one of the most popular ways of driving away in a new car, over taking car finance and car buying, for many different reasons. The whole process isn’t as complicated as some people think as it’s essentially just the long term hire of a car, in which you’re able to swap, return or buy the car at the end of the contract – depending on the route you take.
There are many routes available within leasing including the main – Personal or Business. Underneath this, you’re able to branch off and take the path which is best for you, such as:
Personal/Business Contact Purchase (PCP/BCP).
This option is pretty much the same as a loan in which you then pay fixed monthly payments along with a deposit. A balloon payment is paid at the end and this is when the finance company come up with a final price on how much the car is worth. When you pay this balloon payment, the car can then become your own. There are a range of PCP deals for a variety of different cars, so you’re able to find the perfect match.
Personal/business contact hire
With being one of the most popular option to take within leasing, it’s the one which defines leasing the most. This is where you’re able to choose the vehicle of your choice, then pay fixed monthly payments for a certain amount of time and eventually hand the car back to the company. It’s as easy as that.
A hire purchase is ideally the same as a car loan in which you pay monthly in order to pay the cars value off. Towards the end of the contract, you get the choice of either owning the car, returning the car or swapping the car.
The lease purchase route is pretty similar to a PCP/BCP agreement as it has the exact same idea. You go about it the same way by paying the fixed monthly payments over a certain period of time, with the option of a balloon payment at the end which isn’t optional. You then own the car at the end in which you can upgrade for something better.
Leasing isn’t for everyone as it can be seen as a risk following these paths if you’re not too familiar with the process. Buying may seem like the best option, but is it actually right for you and your financial status?
In the infographic below, we’ve helped summarise all of the benefits when it comes to leasing, in order to make your choice between buying and leasing a lot easier for you.