Types of Car Leasing
Business & Personal Car Leasing Options
The
various types of leasing are:-
- Business Car Leasing
- Personal Car Leasing
- Short Term Rental
- Daily Rental
The main
difference between Car Leasing and Car Rental is the length of time you keep the
vehicle. A typical Car Leasing contract is for 2-5 years a Short Term Rental
contract is for 1-12 months. As the name suggests, Daily Rental is measured in
days rather than months.
Business Car Leasing
Leasing
company cars or vans is a cost effective and tax efficient way for the
businesses of today to acquire their company fleet of vehicles.
Personal Car Leasing
If you
are a private individual looking to lease a car for personal use Personal
Leasing is for you. Also this is an option if you have opted out of your
company car scheme and are given a mileage allowance by your employer.
Buying or Leasing
Which Is the Best?
Each year
the number of businesses and individuals selecting Car Leasing as a method of
financing a new car or van is on the increase. One of the main reasons for this
is they are fed up with the high depreciation rates of most vehicles. With very
few exceptions the majority of cars end up being worth between 30% and 50% of
their purchase price after three years, therefore leaving the owner with a loss
on his capital outlay.
Comparing
Car Leasing against Buying, leasing can be much more cost-effective. The total
cost of your lease is usually less than the amount that the vehicle depreciates
over that time. There are many ways you can save money on your next car lease
in particular if you opt for one of the Special Offers most manufacturers
provide. Not having to worry about the depreciation is not the only benefit of
leasing a car, other criteria to consider are:-
- Your motoring cost will remain constant each month
- You will update your vehicle every 2 — 3 years
- No bills for routine maintenance or MOTs
- Low initial payment to acquire a brand new vehicle
- No hassle to part exchange or dispose of your old vehicle
Car
Leasing is a cost effective hassle-free way of running a new vehicle which is
appealing to both businesses and private individuals alike.
If
leasing a brand new vehicle appeals to you the next thing to consider are the
different types of leasing which are available.
Benefits of Car Leasing
If you
have no wish to tie your money up in a car and you are looking for a straight
forward way to drive a brand new vehicle then Car Leasing (also known as
Contract Hire) may well be for you. At the end of your contract hand the car back.
All the pleasure none of the pain.
Leasing a
brand new car is a cost-effective, hassle-free way of financing a new vehicle,
there are many benefits of leasing a car whether you choose Business Contract
Hire or Personal Car Leasing.
The main
benefits of car leasing are:-
- A brand new car every 2 or 3 years.
- Easy budgeting, fixed monthly costs.
- Maintenance, servicing and Roadside Rescue can be incorporated.
- Road Tax included.
- Mileage allowances to suit all needs.
- None of the costs associated with running an old vehicle.
- You can afford to drive a better car then if you bought outright
- No depreciation worries.
- No hassle of disposing of second hand vehicle.
- Free delivery to your home or work place.
- Option to purchase your car at the end of the contract, if you wish
Maintenance Packages
Maintenance Packages can be added to your lease contract at an additional fixed monthly premium to cover any repair or maintenance costs including replacement tyres and servicing of the vehicle.Taking out a Maintenance Package gives you the knowledge that you will not incur any other costs which you may not have budgeted for. Maintenance can be taken out on Business Contract Hire or Personal Car Leasing contracts.
Common Maintenance Questions:
What is maintenance?
A Maintenance Package usually covers the vehicles annual service and replacement of parts affected by general wear and tear. The dealer will discuss the cover they offer with you fully at the point of purchase.Is maintenance beneficial to me?
If you are considering a Maintenance Package you will need to take into account your annual mileage and the vehicles service requirements. The cost of the package is then spread out over the full term of the contract. The dealer will be able to advise you further.Who would benefit from a Maintenance Contract?
It would be advantageous to include a Maintenance Package if your annual mileage exceeds 20,000 miles. Also if you have a Business Lease on a fleet of vehicles all maintenance and repairs would be covered so you would not have unexpected bills to pay.What options do I have with Maintenance?
There are many different options to choose from such as tyre only cover, service maintenance and repair cover, breakdown cover and future Road Tax cover. Again your dealer will advise you on all the available options.I have taken out a Maintenance Contract, how do I book an appointment?
You will receive a contract number via the finance company, you can then book the vehicle into any approved garage.Who carries out the Servicing and Maintenance?
The maintenance and servicing should be completed by a Franchised Dealer as required in the terms of the contract.Does Maintenance include Windscreen Repair?
Unfortunately windscreen repair is not covered. Your insurance company will be able to help you with this issue.Will Maintenance cover MOT costs?
The majority of lease contracts are for 2 or 3 years if this is the case your vehicle will not require an MOT. If you have a longer term contract and the vehicle needs an MOT you will be given a contact number as part of the maintenance package.Wear and Tear
When taking a lease car finance option, you have a responsibility to return the car to the finance company in good a condition. The car will be inspected at the end of the contract and any damage may incur a penalty to repair the vehicle. Obviously if you have a car for 2 or 3 years it is inevitable a few marks will appear from stone chips etc, so the BVLA (British Vehicle Rental and Leasing Association) created a guide to what amounts to fair wear and tear.These rules are a guide
The vehicle should be returned in a safe and roadworthy condition, with all the appropriate documentation, spare keys and equipment ect.Vehicles should be serviced following the manufacturer’s service schedule. Books should be stamped at the time of service.
Before the vehicle is returned it should be cleaned to allow a thorough inspection of it.
Brief Guide to Fair Wear and Tear
Bodywork
Small areas of chipping. Light scratches up to 25mm in
length, relative to the vehicle´s age. Small dents up to 10mm providing that no
paint has been broken.
Stone chips or scratches over 25mm in length that have
exposed the metal or have rusted. Any impact damage or multiple dents on a
single panel.
Interior Upholstery
Should be clean and tidy, with only slight wear and soiling
through normal useage.
Burns, tears or permanent staining. Any damage caused by the
fitting of equipment such as mobile phones and sat nav units.
Windscreen
Small scratches outside of the drivers vision.
Holes, chips and cracks in the glass and scratches inside the
drivers line of sight.
Wheels
Minor scuffs upto 25mm in length. (Tyre tread must also meet
minimum legal requirements.)
Scratches and other damage to wheel surface.
Wing Mirrors
Minor scuffs as long as no paint has been damaged.
Missing, damaged, or cracked wing mirrors.
Bumpers
Minor scuffs upto 25mm in length.
Deep scratches where paint is broken or dented.
GAP Insurance
What does GAP Insurance Cover?
GAP insurance provides valuable protection during the early part of your car's lease. Current statistics show that the risk of your vehicle being stolen or written off is now greater than ever before.Statistically in the UK new cars depreciate by 40% to 50% over the first 3 years.
Around 350,000 vehicles are stolen every year, which is equivalent to one every two minutes. There are over 240,000 road traffic accidents that may result in an insurance total write off.
What is Gap insurance?
If a loss occurs, GAP insurance will pays the difference between the cash value of the vehicle and the current outstanding balance on your lease.If your vehicle has been written off by an accident or by theft, your insurance company will typically pay out the actual cash value. This can often be less than the actual retail value and is often considerably less than the amount you still owe to pay of the lease..
The amount of the loss from this financial shortfall is the gap
Do I have to have Gap ?
Most lenders who finance cars do require fully comprehensive insurance but not Gap insurance, so the owner would have to pay the depreciation difference if they experience a total loss of their vehicle and chose not to add Gap insurance to their policy.How do I buy GAP?
Most dealerships or finance companies can supply GAP insurance as an extra to your lease. Ask for a quote and your will be happy to assist you. GAP is usually a single payment and will cover you for the term of your lease.End of contract
What are your options?
End of Contract Options are the choices available to you when your vehicle contract hire agreement comes to an end.The option available to you will depend on the type of contract you have whether you have one of the Personal Car Leasing Contracts or one of the Business Car Leasing Contracts. To ensure you avoid any additional charges at the end of your contract your vehicle must conform to the Fair Wear and Tear Policy as laid out in your contract.
Contract Hire
Your End of Contract Options with Personal Contract Hire and Business Contract Hire are:-- Hand the car back with no further payment or commitment
- Extend your contract for a period of 6 or 12 months
Contract Purchase
End of Contract Options with Personal Contract Purchase and Business Contract Purchase are:-- Hand the car back with no further payment or commitment
- Extend your contract for a period of 6 or 12 months
End of Lease Options — more information
Extending Lease Contracts
One of your options is to extend your lease contract, this could be for many reasons- You may not be able to sign up for a new 2 or 3 year lease
- You may not want to pay a further initial payment for a new lease
- You have not decided what vehicle to have next
- You may have ordered a vehicle which will take a few months to arrive
Option to Purchase
Part of the contract agreement is the option to purchase the vehicle. This could be the option you choose because :-- You have had the car from new.
- You can pass the car on to someone in your family.
- The final balloon payment could be less than what you could sell it for.
- It could last for many more years, if it is in very good condition and has low mileage.
Early Termination
All Contract Hire agreements are of a fixed term and legally binding, so early termination could be costly.This means that if you try to terminate a contract early, you are likely to have to pay a settlement figure. The figure varies according to how much time remains of the lease, and also between leasing companies, who each have their own policies regarding early termination.
Visit http://www.1st-leasing.co.uk for information and pricing for lease cars.
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