How to Lease a Car
When it comes to car leasing your options are seemingly endless. You have the whole motoring world at your fingertips and depending on your budget, can soon be driving the car of your dreams.
So where do you start?
Research the car leasing market
With the Internet at your disposal, researching potential vehicles has been made easier than ever before. Online you can find all the information you could possibly need, down the make, model, year, trim and colour. AutoTrader will help you to review makes and models with their comprehensive section.
Get your credit score
Car leasing companies won’t hand a vehicle out to anyone. Just as when you’d apply for a loan of any capacity, the leasing company will check your credit history to verify your financial circumstances. Therefore, it pays to save any embarrassment and obtain your credit report prior to an application. The Money Saving Expert explain why you should obtain your free credit report the main agencies including Experian, Equifax and TransUnion.
Choose a high residual car
The residual value of a vehicle is calculated as how much it’ll be worth over a set period of time. When you lease the car it’ll depreciate in value, so choosing a vehicle that’ll maintain a high value will ensure cheaper monthly payments. Vehicles can depreciate a whopping 35% in the first year alone and then a further 15% in the second and third years. Therefore, it pays to do some research into this matter.
Choose your deal
With car leases, there are two options to consider; open and closed deals. Both have their benefits. With an open contract, the residual value of the vehicle is calculated at the end of the contract. You’ll either have to pay the difference or instead the leasing company will owe you. Closed contracts offer fixed payments and once the contract has expired there won’t be a final payment to either party, no matter the car’s residual value.
Sign-up to receive notifications
If you don’t need a lease car right now, sign up to the company’s newsletter or subscribe to receive the latest special offers and discounts. When a new offer is launched, you’ll be the first to know about it and can take advantage.
Read the terms and conditions
Without reading the full terms and conditions from the leasing company, you risk missing an unusual condition that could affect your contract. For instance, some leasing companies will input a clause whereby you must pay a large fee if going over the agreed mileage limit.
What are the benefits of Car Leasing?
There are a number of benefits to car leasing and as billionaire oil tycoon J. Paul Getty said: “If it appreciates, buy it. If it depreciates, lease it.”
Modern cars certainly fall into the second category. Whilst classic cars will increase in value, new vehicles will plummet in worth by up to 50% in just three years. Essentially, if you take a car loan out for a new car, you’re paying a significant amount for something that’s only dropping in value.
Leasing offers a viable alternative. Instead of owning the vehicle, you’ll effectively borrow it for an agreed set period of time. Once the contract expires, you’ll hand the car back to the leasing company.
Car leasing monthly payments can be anywhere between 35% and 55% less expensive than a car loan. Only a small deposit will be required too. Leasing a vehicle allows you to drive a car that’s out of your price range when purchasing. The manufacturer’s warranty will apply throughout the leasing period and road tax is often included.
WhatCar say that extra services include breakdown and maintenance cover being included in your monthly payments.
What cars are best for leasing?
In terms of finding the best cars to lease, it all comes down to a number of factors. These would include if the vehicle has a seasonal period, the current demand for car leases and the vehicle’s depreciation value.
Every manufacturer and model you can think of will be available on lease, but ideally, you want to choose a vehicle that’ll depreciate in value least. A low depreciation value will lead to smaller monthly payments. Typically, German cars are renowned for low depreciation value. This includes Volkswagen, Mercedes, Audi and BMW.
Acceptable Wear and Tear
When your leasing contract draws to a close your vehicle will be inspected for wear and tear. Anything deemed as excessive can result in a penalty fee. Of course, if your leasing contract was over the period of two or three years, it’s expected there’ll be bodywork marks such as the odd scratch or chip.
To stop you worrying over the condition of the car though, take a look at what is generally expected from a returned vehicle
The lease car should be returned in a safe and roadworthy condition. You must also return documents, spare keys and any equipment supplied.
You should provide a copy of each service undertaken, as agreed by the leasing company. Books should be stamped with the time of service.
The car should be returned in a clean condition, both on the exterior and interior.
Guide to acceptable wear and tear
Acceptable: Small and minor scratches
Unacceptable: Chips or cracks in the glass
Acceptable: Minor scuff marks, with the tyres meeting legal requirements
Unacceptable: Illegal tyres and/or severe damage to the wheel surface
Acceptable: Minor scuff marks
Unacceptable: Missing, damaged or cracked mirrors
Acceptable: Scuff marks up to 25mm
Unacceptable: Scrapes and scratches over 25mm. Dents or cracks in the bumpers
Acceptable: Scratches up to 25mm in length and small dents, which haven’t cracked the paint
Unacceptable: Multiple dents and scratches over 25mm.
Acceptable: Clean and tidy with expected signs of wear and tear
Unacceptable: Burns, tears and stains.
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