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Car leasing is on the rise – is it right for you?

Nic McBride

Nic McBride
Oct 10, 2017

More people are choosing to lease a car instead of buying one, so is it time for you to consider getting on board?

Car dealers have reported a big fall in the number of new cars being sold - but, car leasing companies have seen an increase in people using their services.


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August – usually one of the busiest times of the year - saw new registrations down by 7%, compared to the same time last year, according to the Society of Motor Manufacturers and Traders.

But the car leasing industry is bucking this trend, with an increase of 6%, says vehicle leasing broker,


Most popular purchases vs most popular leases

The most popular cars bought so far this year are:

Ford Fiesta
Ford Focus
Volkswagen Golf
Nissan Qashqai
Vauxhall Corsa

The top five leases are:
Range Rover Evoque
Hyundai Tucson
Audi A5
Mercedes A Class
Kia Sportage


Why are more people leasing? sales director Andy Houston said people were beginning to understand the value in car leasing.

Leasing was becoming more popular as an alternative to losing money on a depreciating asset, he said.

"It's better to let a finance company take the loss rather than paying cash or traditional finance and doing so yourself," Mr Houston said.

"People also want to be able to update their car more regularly and with no hassle. Leasing a car is the perfect way to achieve this and explains why we are seeing such growth," he added

* Time to switch to an electric car? What about the running costs?
* Paying more than you can afford for a new car? Here’s how you can tell
* Top five things to know when buying your first car - what to look out for


So, what is leasing?

Leasing means you sign up to a contract to drive a car for a certain period of time.

At the end of that time, you return the car – or, in certain cases, you can choose to buy it.

There are two main types of car-leasing deals – personal contract hire (PCH) and personal contract purchase (PCP).

There are important differences between the two, so make sure you know the difference before you sign on the dotted line.



The main difference between PCP and PCH, is PCP gives you the opportunity to buy the car at the end of the contract, making you its legal owner.

A PCH might include a maintenance package to cover non-fuel running costs, such as road tax and routine servicing.

Monthly payments are typically lower for PCH than for PCP, but you may have to pay for the first three months in advance.

Always check the rate of repayments and make sure you can afford them.

For more information on getting a PCP, check out our guide: Buying a car: What is a Personal Contract Plan and is it worth it?



Insurance is not included in the monthly repayments for a car leasing contract.

You will have to get yourself covered, just the same as if you owned the car.

Make sure your insurer is made aware that you are leasing the car. If you don't it can cause confusion as their system may be based on the assumption that you own the car.

It shouldn't make a difference to the price.

For more information on how to get a deal on car insurance, check out our guide: How to save money on your car insurance


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Upfront payment

Most loan deals will ask you to make an initial payment 

That is then deducted from the full lease amount allowing you to spread what’s left over the lease length. 

Essentially the more you pay up front, the less you pay per month and vise versa.


Pros of leasing

*It makes switching to a new car every few years more affordable.

*You don't have to worry about the car’s resale value.

*At the end of the lease, you can walk away (as long as all payments have been made).


Cons of leasing

*You might have to pay a penalty for any extra mileage outside of what was agreed in your contract.

*You might be charged to cover the cost of any damage.

*Cancelling early can be tricky - you’ll probably have to pay a fee, or might be made to pay all the outstanding payments.

*With both PCH and PCP the lender can repossess the car without a court order. But, with a PCP, once you have paid off a third of the total amount, a lender can’t repossess it without a court order.


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