What is car leasing in the UK?
29/01/2022
If you need to know more about what is car leasing in the UK, then we take a closer look at what leasing a vehicle means.
Essentially, when you lease a new car, you are agreeing to pay a monthly amount for an agreed period.
You can also lease vans as well as cars, and there are lots of benefits to leasing.
One of them is that you don't have to worry about depreciation which is the amount of money a vehicle loses over time.
There are lots of terms used when leasing a car and here we explain more of them.
What is contract hire?
It's important to understand that when you lease a car, its formal name is contract hire and there are two forms of this:
- Personal contract hire: Also known as PCH, this is a car lease agreement that is signed by someone to lease a new car
- Business contract hire: Also known as BCH, this is a car lease signed by a business or employer with an employee or a business owner driving the car.
It's important to appreciate that hire purchase, or HP has nothing to do with car leasing and neither does personal contract purchase, or PCP, which is another way to buy a car.
What is car leasing?
There is still some misunderstanding about what car leasing actually is, and one of the best ways to understand this is to compare leasing a car, to either owning or renting a home.
This means that car leasing runs along similar lines to renting a house, and with a lease, you don't own the car.
You simply pay an initial rental amount, and this varies between car leasing firms but with Tilsun Leasing this could be either one, three, six or nine multiples of your monthly payment.
If you pay a larger initial rental amount, then your monthly payment will fall as a result.
Do I own the car that I lease?
The simple answer is no, you do not own the car that you lease because it will always remain the property of the car leasing company.
You will, however, become the registered keeper and you be responsible for insuring the vehicle and maintaining it properly.
This also means that you are not responsible for the car's depreciation and when the agreement ends you simply return it to the car leasing company and get new car, or simply choose another option to get behind the wheel of a new car.
It's also worth appreciating that you still enjoy the manufacturer's warranty, so should something go wrong mechanically then the manufacturer will have to put that right.
You can also enjoy peace of mind motoring by having a maintenance package that sees the routine servicing and maintenance of your leased car taken care of, and this will also include paying for the exhaust system and new tyres.
Car leasing benefits explained
There are lots of benefits to car leasing and they include:
- Low monthly payments
- Driving a brand-new car
- Enjoying a low deposit
- Changing to a new car when the agreement ends
- Your monthly payment is fixed.
Also, the initial rental, or deposit, tends to be much lower than for most other car buying financial products.
And you won't have to worry about maintaining an older car - you simply hand your leased car back to the car leasing firm and choose a new one (if you want to start a new agreement).
What is car leasing in the UK?
Here, we have looked at the question, 'What is car leasing in the UK?' and found that a contract hire agreement can be a great way to drive a brand-new car for a reasonable monthly amount.
Contract hire is a flexible way of driving a new car because you get to choose the terms, the annual mileage limit and how long the agreement will run.
For more advice about 'What is car leasing in the UK?', then it’s time to speak with Tilsun Leasing on 03330 040 888.
