UK companies have been leasing cars for years. Many people have been saving up or taking out expensive loans, while businesses have opted to lease them instead. It only made sense. They could get behind the wheels of a brand new car without needing to make a huge investment.
Today, it isn’t only businesses that can take advantage of this. Personal leasing is now a popular practice. As far back as 2018, industry statistics said that 1.6 million people in the UK leased a car.
What is Car Leasing?
Dealing with car leasing companies isn’t dissimilar to renting, as you choose your vehicle for a specific period (typically somewhere between two and five years) for a fixed fee. You have complete freedom when it comes to choosing the specifications, make, and model of your vehicle, and your contract is specifically tailored to you with regards to the structure of your payments, the length of your contract, and the estimated annual mileage.
Your vehicle’s total cost is based on multiple factors: the duration of the lease, the annual mileage allowance, the estimated value of the car at the end of your lease, and the value of the vehicle (undriven).
How it Works
You first make your deposit, also referred to as an initial payment. This is typically the equivalent of a small number of monthly installments. You then pay a fixed amount per month until the contract expires. Typically, the longer the agreed period, the smaller amount you pay per month. You determine the mileage you’ll cover, which is worked out by an assessment of your recent service reports.
Once the lease is over, you simply return your vehicle. It gets checked over, and your parents come to an end. You can then lease another vehicle or not. If the agreed mileage has been exceeded, don’t worry, as there’s usually a straightforward cost per mile payable upon the return of the car.
UK vs U.S. Leasing
There are many things in common between countries when it comes to car leasing. However, if you’re looking to lease a car abroad, one thing you should be aware of is the different terminology. Here, we’re going to use the U.S. as an example. It’s absolutely vital that you know what goes into any financial contract you sign when leasing a car.
That means you should know what all the terms are First and foremost, in the U.S., it’s always called leasing, whereas in the UK, we sometimes refer to it as a personal contract hire. And what we call a hire purchase in the UK is known as financing in the U.S. Finally, what we call a car hire is known as a car rental in the U.S.
While these terms may be obvious, you still need to know them. They also serve as a reminder that we have different terms for things in the UK than in the rest of the world. So just be aware of that when leasing a car abroad.