London Car Leasing
In simple words, London car leasing means you will get your hands on a brand-new car for a fixed duration. You will be able to call that car your own, drive it as your own but for a fixed period.
At the end of that period either you will give the car back to the leasing company or you can pay off the residual value to become the permanent owner.
Car leasing in London works in the following ways: you go to a London car leasing company. You will then have to pay a fixed amount which will be the initial deposit.
If you have a good credit score you may even end up getting a car with zero down payment. In the contract, you will agree to drive the car for a fixed amount of time (it could be 2, 3 or even 4 years). You will also have to pay fixed monthly payments which are mentioned on the leasing contract.
Your goal will be to keep the car in good condition, drive within the mileage range that is set by the leasing company so that you do not have to pay any hidden fees when returning the car.
At the end of your term, you can walk away, return the car, lease a newer model or even keep the current car by paying the residual value. It all depends on how you would like to proceed.
How does the initial non-refundable fee work in London car leasing?
The initial non-refundable fee varies depending on how much you are willing to pay upfront. If you pay more for the initial down payment, then you will need to pay less monthly.
Other factors that are also considered when leasing a car in London are the yearly mileage range, how many months you want your lease term to be and any other features or options you want in your leasing contract. All these factors will end up deciding the final cost for the lease.
The leasing company will run a credit check on you. If you have a good credit score, then you will pass. After you have passed the credit check the leasing company accepts your application, you should then go into finalizing your leasing contract.
Why should you choose car leasing?
Car leasing is one of the most affordable options for you to own your private commute. If you are someone who cannot afford to pay for a car upfront but can afford the monthly payments, then you should choose car leasing.
A London car leasing contract is similar to your Netflix subscription. You will be paying a monthly fee to keep your car just like the monthly subscription fee to keep your Netflix account.
The only different thing is you will need to pay a down payment. This down payment can cost less but those fees are going to add up on your monthly payments.
If you pay a lower down payment, then you will pay a higher monthly fee and higher down payment will result in lower monthly fees.
These all depend on how you want your leasing contract to be designed. Car leasing in London is prominent to help people own their commute at an affordable price.
How does car leasing in London work?
One thing you need to make sure of before you sign any contract is the terms. You should always read the terms and conditions of your leasing contract before signing on the dotted line.
If you are not clear about the terms and conditions, then it is our advice that you talk with the leasing company and ask questions that will make the contract clearer to you.
In a leasing contract, there is an agreed yearly mileage limit. For example, you may not be able to drive more than 40,000 kilometers per year. If you exceed that limit, you will have to pay additional charges as per the leasing contract.
Now, if you think you will have to drive more than 40,000 km per year then you should tell the leasing agency to increase the range limit, which might cost you a bit more upfront or monthly.
Most of the London car leasing contracts do not have maintenance costs included. In some leasing contracts, you can add the maintenance cost to your monthly payments but those cases are very rare.
You need to be specific about the maintenance of your car, otherwise, you will have to pay for the servicing from your own pocket.
You need to make sure your car is in good condition before handing the car back over at the end of your lease term. If the condition of the car is not good you will have to incur additional charges according to the leasing contract.
Differences between London car leasing contracts and PCP
Both car leasing contracts and PCP (personal contract purchase) look similar. You will need to pay a deposit and monthly payments for both of these contracts. However, what sets them apart?
The full form of PCP is a personal contract purchase. It is not like a lease, rather you will pay the value of the car within a period which you agreed upon in the contract.
For example, if you want to buy a car that is around £10,000, but you cannot afford to pay £10,000 right now, you could pay £2,500 per year for 4 years in a PCP.
When your application is accepted by the leasing company, you will have to sign the PCP, pay the agreed deposit and then you will be able to drive the car.
The finance company will also charge you a fee for finalizing the PCP. You can then make monthly payments for your agreed term. The total payment will sum up to the total value of your car.
The main thing about a PCP is that you will pay for the total value of the car within the term length of the contract. After you have finished paying for a PCP you will become the permanent owner of the car.
It is similar to a mortgage as after you have completed the full payment you will be able to own the property.
One thing about PCP’s is they are more expensive than a car leasing contract. You will have to pay less for the same car if you lease it. Car leasing in London is like renting an apartment.
You pay a few months of the advance payment and then start to live in the apartment. Payments for the lease are made the same way you would pay the monthly rent.
You are paying to keep the car whereas in a PCP you are paying the value of your car to be owned permanently. That is why PCP payments are more expensive than a London car leasing contract.
What happens at the end of the PCP contract?
You have three choices when the term for your PCP contract comes to an end. You will be able to return the car to the company that financed your PCP. Another option is to trade the car in for another model.
Of course, if you decide to trade the car in then you will have another PCP deal for the new car. The last option is to keep the car. If you decide to keep the car you will have to pay a balloon payment. A balloon payment is similar to the residual value of a car leasing contract.
The balloon payment is a cover charge for the guaranteed future value of the car. The guaranteed future value is decided by the finance company when the contract for the PCP is made.
The finance company forecasts the value of the car when your term ends and sets it as the balloon payment. You pay the balloon payment as a sum of money at the end of your term, which is more than the previous payments paid.
Balloon payments help borrowers by reducing the fixed monthly amount in return for a fee at the end of their contract.
At the end of a lease, you will hand the car back to the leasing company or you can arrange for another lease for a different car. There are other possibilities such as paying the residual value for the car or extending the term of the leasing contract.
Pros of London car Leasing
- It is an affordable method to get access to a car.
- The upfront payment deposit is based on your capability.
- You will be able to drive a better car for a much lower cost.
- The process is much easier.
Cons of London car leasing
- You are not the owner of the car.
- Servicing the car is paid from your own pocket.
- You will have to pay additional charges if you go over the mileage limit.
- If the car is not in good condition as per the contract you will have additional charges.
What a car lease contract includes
Most leasing contracts come with a manufacturer’s warranty. This means for some time you will get free maintenance for your car. The delivery of your car is often free. A car leasing contract in London will cover the car tax or road tax.
Why is car leasing for you?
A car leasing contract is for you if you want to drive a new car every few years. You will be able to drive a car that has all the latest features, is reliable, and safe for you and your family.
You will not need to worry about paying for the maintenance of your car as you will be covered by the manufacturer’s warranty.
It is a great choice for you if you drive around 40,000 km per year. It’s also a good idea if you are not interested in modifying your car with spoilers or car kits.
You also do not want to own a car as it loses value, so you can lease for a small monthly payment. It is a great option for you if you are unable to afford the full payment for a car. In return, you can decide to go for the cheaper and smarter option, which is leasing the car.
What happens if you miss a payment?
Missing monthly payments is not advisable. With any type of finance, if you miss the monthly payments there are some consequences that you need to deal with.
Missing monthly payments will affect your credit score negatively. The chances of you getting other financial arrangements in the future will also decrease.
For example, if you missed a payment because you could not afford it then the leasing company will charge you an additional fee. The exact amount for the additional fee will depend on the leasing contract you signed.
The penalties for missing a payment are in the contract. Some lenders are much more lenient on missing a payment whereas other lenders may be more strict.
The best response if you missed the deadline for the payment is to call the finance company. Call them and let them know the reason you missed the payment.
After you have explained the situation, they will explain any consequences. In some cases, you will have to pay the late fee.
What should I do if I cannot afford the monthly payments?
The best option is to let your finance company know that you are unable to pay the monthly payments. They will look into it and offer you a solution.
It could be lowering your monthly payment by extending the term of your contract. Do not fall behind on your monthly payments. Contact your leasing company before it happens.
Car leasing in London is one of the most affordable and easiest options. This guide is here to help you find all the information required to lease a car in London.
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London car leasing FAQs
What is car leasing?
Car leasing is an agreement between you and the leasing company where you get to drive a new car for two to three years.
You get to choose the type of car and the amount of mileage you wish to drive the car. Then the car is delivered to you for you to drive. After the lease period is over you return the car to the company.
What are the benefits of a car lease in London?
The biggest benefit of leasing a car is that you get to drive a new car while it is in the best condition possible.
You can take advantage of the latest technology, safety features and a clean engine. You also avoid the hassle of servicing a car and repairing it once it gets older.
Should I lease or buy a car in London?
Car leasing is basically a two to three year term agreement allowing you to rent a car, on the flip side, buying a car allows you to own it for the lifetime of the car.
If you are looking to keep updating your car so that you only drive relatively new and avoid car repairs, leasing is better for you. But if you get attached to your car and see buying a car as a long-term investment, then buying might be the right way to go for you.
How does car leasing work in London?
Car leasing is a great way to get the benefits of a new car at only part of the cost. Through car leasing you can rent a new car long-term.
You are required to pay an initial payment as well as monthly payments throughout the term of the lease. When the lease ends, you return the car.
Are lease cars brand new?
All cars offered for lease brand new. You won’t need to concern yourself with the depreciation of the car’s value over time. Your monthly payments will cover any depreciation.
Are lease cars in stock right now?
A variety of models are in stock for lease right now. If you don’t see the model you like, factory order is also an option, but you’ll have to wait while it is delivered to London dealer.