Leasing: How Does It Work?

Leasing: How Does It Work?

There are a range of different paths to take when it comes to leasing and it does have its fair share of pros and cons, just like most things. Car leasing is pretty much just the long term hire of a car in which you can either swap, return or buy the car at the end of the contract, just whichever is best for you.


Types of Leasing


This is one of the first steps when it comes to car leasing as it helps you decide which options are available for you. Personal leasing is the best match if you’re after an everyday car for personal use such as shopping, completing daily tasks and more.

There are a range of different lease cars and top deals on finance which are available for personal leasing including family cars, hot hatchbacks and city cars.


Just like personal leasing, choosing to business lease your car helps to narrow down and find the perfect road for you to take within leasing. If you’re looking for something to show off and give your business that professional look, then this is ideal for you. There are a range of cheap lease cars which are available in order to give your business the look it deserves.


PCP/BCP (Personal/Business Contract Purchase)

This option allows you to pay fixed monthly payments for a certain amount of time of your choice (for example, £150 per month for 24 months). Towards the end, there is a balloon payment which has to be paid in order to buy the car and is usually the value of the car after all the monthly payments have been paid.

There are three different options which you can take once the contract ends:

  1. Return the car/cars
  2. Buy the car
  3. Part Exchange


PCH/BCH (Personal/Business Contract Hire)

Personal/Business Contract Hire is similar to the Contract Purchase, but you don’t have the option to buy at the end, so it’s perfect if you want a new car every few years. The fixed monthly payments are required over a fixed amount of time in which you hand the car back at the end of the contract.


Hire Purchase

This is one of the most popular options when it comes to leasing as it defines it the most. The fixed monthly payments you pay, pay off the value of the car but the car is still owned by the company itself.

What options do you have after the contract is up?

  1. Ownership
  2. Return
  3. Upgrade and Part Exchange


Lease Purchase

A Lease Purchase is pretty much the same as a PCP as you pay the monthly payments over a certain period of time in which a balloon payment is required to pay at the end. Regarding the balloon payment, you can pay this in a number of ways including a cash payment, continued finance or part exchanging the vehicle.

What options do you have at the end of the contract?

  1. Own the vehicle
  2. Part Exchange

So What Are The Advantages Of Leasing?

There are a range of different advantages when it comes to car leasing, you just have to make sure it’s the correct path for you.

  • Predictable Monthly Costs – With leasing, you know the exact amount you’re paying each month so you’re able to handle your money easier.
  • Low Deposits – Depending on where you go and which deal you choose, you’re able to put down a deposit of your choice. Zero deposit deals are also available.
  • Drive a Newer Car for Less – Leasing gives you the chance to drive the car of your dreams for affordable monthly payments which suit you. You’re able to swap whenever you want and change to a different car if you wish.
  • Depreciation – This is not a problem when it comes to leasing a car unlike when you’ve bought a car, as you give the car back to the company.
  • Flexible – When it comes to leasing, it’s all pretty flexible as there are a range of different routes you can take. Bad credit and no deposit deals are both available, so anyone can lease.

About The Author

Keeley Davies

I am a social media lover with a passion for all things fast, four wheeled and fun. One day you’ll see me cruising around in a Bentley Continental GT Convertible, but in the mean time I’ll just write about cars.

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