You may have already heard of a vehicle leasing or contract hire arrangement, and it’s a deal that can certainly work for a number of people. The arrangement is pretty simple: you find a leasing company or provider and look through their range of deals or search for the deal that’s best for your requirements, budget, and preference, and you can then simply pay an up-front deposit (usually about three to six months’ worth of the vehicle’s monthly payment), and you can drive the brand new vehicle you want.
It’s a brilliant arrangement for many because they don’t have to shell out a huge sum, and they can just settle a set fee per month and don’t have to worry about the vehicle’s depreciation at the end of the term. But what other facts are there about vehicle leasing or contract hire agreements? Here’s what you should know.
- Choosing the best deal
You can easily find a contract hire or leasing deal online, and all you have to do is search for your preferred model or input your budget or the length of time you would like the lease contract to be, and you can be presented with an array of choices. But if you want to get the most out of a contract hire and leasing agreement, choose the duration of the contract carefully because the cost will also be based on the duration. Normally, the longer the duration, the lower the cost.
Here`s another thing to consider: figure out the full cost you will pay throughout the contract, and include any processing or admin fees that can also be charged as well. In order to do this, just multiply the prospective monthly fee by the deal`s number of months, and add the deposit. You can then easily compare the final figure to various other finance agreements for vehicles, such as paying by credit card, personal loans, hire purchase, and so on.
Ultimately, if the amount you end up with is higher compared to the amount you may lose with the vehicle`s depreciation if you just bought it and sold it yourself, then it may not be ideal. You should also consider the amount you may have to pay if you go above the mileage limit each year so you can factor this into the total cost.
- The end of the deal
At the agreement’s end, you can simply return the vehicle and have it collected by the provider. You may have the choice of extending your lease, so it would be worth giving the provider a ring a few months prior to the deal`s end to find out.
Once the vehicle has been taken and collected, it will be inspected for significant damage beyond standard wear and tear, and its mileage will also be checked. Provided there are no repairs or you haven’t gone above the mileage limit, you don’t have to pay for anything else.
- The pros of vehicle leasing
Vehicle leasing can give you the lowest costs upfront if you want a brand new vehicle, and it usually offers lowers monthly payments compared to other deals as well. Your vehicle will often be covered under the warranty of the manufacturer, and it can include breakdown cover and road tax, and servicing may be included as well.