Every year, a significant number of people rush to lease a car without outright payments and burden themselves with colossal budget disturbance. Also, they get to buy their favorite car or drive a new vehicle without paying the amount at once. It is trending as it is affordable and manageable as you receive more time to pay the car leasing loan and get some tax and insurance relief.
Car leasing is a long process where the applicant asks for a car loan through their Employer or any other way from the car leasing companies.
In this case, car leasing is referred to as a salary-sacrifice car as your Employer pays the loan initially. After that, the Employer deducts that amount from your monthly salary in a small but regular payable percentage.
Every country has some rules when it comes to car leasing. And just like all of them, the car leasing process in the UK works differently.
All about Car Leasing Contracts in the UK
So, here we have explained how car leasing works in the UK.
What is Car Leasing?
In simple words, car leasing is the process where you make a deal with a car dealer or broker, and they provide you with a car for 1-5 years. You pay the amount for that duration every month. After the tenure is completed, the provider takes back their car. The most usual car leasing duration is 2-3 years, after which the vehicle is returned to the dealer.
Difference between purchasing and leasing a Car
In car purchasing, you have to book the car, pay the entire amount before receiving the vehicle, complete paperwork, pay taxes, and then you are the owner of your car.
In car leasing, you get the car by applying to car leasing companies. You pay the decided amount in intervals for the duration of 1-5 years. You can use the car during that period, but you don’t own the vehicle. So, when the period ends, you have to give it back.
Types of Car Leasing Contracts
There are three types of Car leasing Contracts which are as follows;
- Private Car hire; Private or personal car lease is the most common type of car leasing contract in the UK. It is befitting for those who want to enjoy a car for a small duration
- Business Car hires; It is almost like private car hire, but It is hired for personal use. There are a few VAT benefits with business car hire. The company pays the amount in small amounts. Non-refundable sections.
- Finance Lease; It has slightly different contract clauses as a finance lease is granted for high mileage cars and where it can be in wear and tear condition. So, the finance lease is different in terms of contract termination conditions.
How does the process of Car Leasing work?
Here are some steps you will go through when making a car leasing contract from Car leasing companies.
Complete your research
Before entering the entire procedure, research work is due diligence. You have to check what type of car you wish to lease and what car leasing companies provide those cars.
Dealership or Car Brokers
The next step is between a car dealer and a car broker. Dealers have very few options for cars that they lease. On the other hand, Car brokers have a greater variety of cars than the dealer.
It gives you the option to lease your preferred car.
Decide which one to go with
When you have done research about your preferred car dealers and brokers, you should check different options and their contract terms and amount. After that, decide to go with the best one of them.
Look for the best car leasing deal
When you have decided to go with a dealer or a broker, check their Car leasing deals. Think about all the terms of their agreements. And go with the cost-effective and most suitable car deal.
When you have checked all the deals, apply for the car lease contract.
Complete your Paperwork
When applying for the car leasing deal, make sure your attached documents are complete and as per their demand.
Receive your Car
When the application is approved, your car will be released. And, now you are eligible to drive your favorite car on lease.
Pros and Cons of Car Leasing Contracts
After the process is explained, here are some further details which can help you decide whether you should apply for car leasing or not;
Some Advantages of Car Leasing applications
- You don’t pay the outright amount.
- You get relief on tax and car insurance.
- You can drive a new car.
Some Disadvantages of Car Leasing Process
- You don’t own the car.
- The payment is non-refundable.
Car leasing is best for those fond of changing cars after some years. It is wise to go with reliable car leasing companies to avoid any problem in contract tenure.