Overview of car leasing

Car leasing can be likened to renting a vehicle. When you rent a car for a short period, you pay a daily rate based on the car model and other factors. Similarly, with leasing, you pay a fixed monthly fee to use a new car for a specific period with an agreed mileage, returning it once the lease term concludes. Unlike buying, there's no option to purchase the vehicle; you simply return it, concluding the lease agreement.

Leasing is also known as personal contract hire (PCH) or business contract hire (BCH). Both terms essentially refer to whether an individual or a business is leasing a vehicle.

At LINGs we may also offer car leasing on pre registered or used cars. These work in the same was as leasing a brand new unregistered car. The Road tax will still be included for the full duration of the lease and it will still come with the remaining manufacturers warranty but MOT’s and services may be due sooner.

How does car leasing work?

When you lease a car (typically a new car, although we may offer some pre registered or used cars) the cost of the contract is split up into equal monthly payments. The length of the contract varies depending on what you choose but typically goes from 18 months to 4 years. In most cases you will pay an initial payment is made in the first month which is then followed by fixed monthly payments for the remainder of the contract.

Lease deals are often presented as two numbers, such as '3+ 23.' This indicates an upfront payment equivalent to 3 months, followed by 23 consecutive monthly payments, resulting in a total contract duration of 24 months.

An example of this would be a car advertised as £400 including VAT per month on a 3+23 profile would mean the initial payment is £1,200 followed by 23 payments of £400.

When selecting a car to lease, you typically have numerous options, including the make, model, and specifications. The lease contract is tailored to the specific model, estimated mileage, contract duration, and payment structure, offering considerable flexibility.

What are the three types of leases?

There are three types of leasing - finance leasing, operating leasing and contract hire.

However, when it comes to car leasing, we talk about Contract Hire.

Contract hire allows you to choose a new car every few years without the worrying of the value of the car declining or you having to sell it at the end of the agreed term. This is because you hand the car back at the end of the contract with no further obligations (assuming that is that you have stuck to the agreed terms of your lease such as your annual mileage limit and fair wear and tear usage.)

They key features of contract hire are:

1. Fixed monthly payments cover the rental of the vehicle (you can also include any maintenance options if required.)
2. The monthly rentals are calculated by taking into consideration things such as: the cost of the vehicle, the contract period, the anticipated residual value of the car, the mileage allowance per year (which is agreed by yourself before you enter the agreement), any additional options such as tow bars/paint options or maintenance packages.
3. You never own the vehicle whilst you are paying the monthly rentals. It remains the property of the finance company during the contract. This means you do not have to worry about any deprecating value.

Some key benefits of contract hire

1. Low upfront Payments: Commence your lease with a minimal upfront rental cost from as little as 1 month upfront.
2. Stable Payments: Enjoy fixed rentals throughout the entire package.
3. Flexibility: Tailor terms to align with your financial needs and driving preferences, including variable contract durations and mileage terms.
4. Inclusive Services: Monthly rentals cover road tax (VED) and breakdown cover.
5. Optional Maintenance: Include vehicle maintenance in monthly fees to evenly spread the associated costs.
6. Worry-Free Return: When returning the vehicle at the agreement's end, there's no need to concern yourself with its depreciation or disposal.

Things to take into consideration for contract hire

1. Terminating the contract earlier can be expensive.
2. If you exceed your agreed contract mileage the excess mileage charges can be expensive as they are based on a ‘pence per mile’ basis set out in each contract.
3. You must return the vehicle in a well maintained condition. Any damage over and above that stated in the Fair Wear and Tear Guide will be subject to additional charges.
4. Vehicle must be insured with full comprehensive cover
5. You will never own the vehicle as there is no option to buy it

Step-by step guide to Contract Hiring a car

1. Choose your car

I recommend that you choose from the website\'s list of cheapest deals, as this contains my best value, most readily available models. Alternatively, I can find you a bespoke car or van, if you simply ask using my quote form.

I only select the cheapest deals, and I know I don\'t have the widest selection in the world (I don\'t want to waste your time with uncompetitive cars), but I usually list over 500 cars and vans. The primary difference between business and personal contract hire is just the VAT exclusion/inclusion in the price.

2. Fill in an online proposal (paper form also available)

You can get a printable or online version of my proposal form here on the website. Because the proposal form contains so much information which you may have to look up, it is fully protected on a secure server and security certificate. If it\'s a paper form, I need it signed.

3. Send the proposal form to me

When you have made sure you have completed ALL the information on the proposal form, press the submit button (duh!) on the online form, or scan and email it. I may require from business customers a copy of your latest accounts or P&L and balance sheet for the benefit of the finance company (I will advise you of this, it depends on a number of factors such as credit scoring, number of years trading, etc). From private customers, maybe I need a recent gas/water/electric bill, or bank statement to prove address, to prevent identity fraud. You will always need a copy of your full UK Driving Licence, or passport.

In order that they may assess your suitability for credit, finance providers and some other service providers will make a search with a credit reference agency and this will leave a footprint on your credit file. If you are a company or partnership, they will also make enquiries about the director(s) or partners with a credit reference agency. Some funders and service providers may carry out searches periodically after the inception of an agreement if they supply a credit line.

4. Wait for an order form, then sign it - at this stage you will commit to the car

When finance approval has been completed, I will email you an order form for your car. A signed order form commits you to ordering the car. Check it, print it, sign it, indicate your colour choice, then scan/email it back to me. I then confirm and order the car and confirm the lead time.

5. Sign your lease agreement.

This is the main paperwork part of your lease. Known as Master Hire Agreement, depending on what finance funder used this may be a hard copy or signed online using an E-Signature. We may also require a copy of your Driver's Licence, a recently utility bill and/or bank statements to verify who you are. This process is known as Know Your Customer (KYC). Please note, we will be unable to arrange delivery of your new lease vehicle without a completed agreement that has been checked and authorised.

6. Enjoy your car!

You need to insure your car, but anyone you choose can drive it. Treat it as you would treat your own personal car. You have full UK manufacturer\'s warranty and whatever breakdown cover the manufacturer applies. Usually, servicing is your own responsibility. With all the money you have saved, book yourself a nice expensive holiday, or buy a diamond ring!

7. Prepare for, then return your car at end of contract

Simply, your car needs to be in a condition commensurate with its age and mileage. This is common sense. A useful guide wot I wrote (heh) is available in PDF format to read/print here. You just hand the car back. It is collected directly from you at your address.

Some helpful links for you

Code of conduct

Vulnerable Persons Policy

Initial Disclosure Document

Any questions?

You can talk to me on the phone on 0191 460 9444 or send me a email (email gets a very fast response - faster than phone message), or live text-chat to me by using the button below the page header. I'll be glad to answer any questions.