Personal Car Leasing Explained
Every year, more and more people are choosing to lease rather than buy their new vehicle. In the UK today, personal car leasing now accounts for 1.9 million vehicles.
What is Personal Car Leasing?
Personal car leasing is similar to renting, in that you’re using a particular vehicle, for an agreed length of time (usually between 2 – 5 years), for a set fee.
You have complete freedom of choice over your vehicle’s make, model and specifications (colour, trim, etc.) and your contract is tailored to you in terms of annual mileage, length of contract and how you’d like payments structured. The total cost of your vehicle lease is calculated on several factors:
- The value of the car (un-driven)
- The car’s estimated value at the end of the lease (the residual value)
- The annual mileage allowance
- The length of the lease
- The admin fee
At the end of the personal car leasing period, the vehicle is simply returned, checked over and payments cease, leaving you free to lease another car, should you wish.
Why is Personal Car Leasing so Cost Effective?
More and more individuals are looking at the option of personal car leasing instead of outright purchase as a much more cost-effective way of running a car.
Now more than ever, due to heavy car depreciation losses and unexpected repair costs associated with buying, personal car leasing can save a considerable amount of money over the lease period, with many these days seeing it as the cheapest way to drive a brand-new car. With car leasing, you’re simply paying the depreciation on the car, meaning your monthly outgoings are significantly lower compared to most other forms of finance.
Who is Eligible For a Personal Car Lease?
The good news is that almost everyone is eligible for a personal car lease, you simply need to meet the following criteria:
- Hold a full UK Drivers Licence
- Hold a British Passport
- Be on the electoral role at your current address
- Have a regular, secure income
- Provide a minimum of 3 years employment / education history
- Not been declared bankrupt, nor have CJJs or IVAs against your name
- Be successful with your credit application
As part of the application process, you’ll need to undergo a personal credit check to assess credit strength and risk status. This is a relatively easy process. It is much easier to lease a car with a healthier credit status, however, if you have a poor credit rating you may still be able to lease using a funder specialising in those with poorer credit scores. You can check your credit status here.