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How Leasing Works



With so many options available, deciding how to fund your next vehicle can be confusing.  That's where we can help.  We have extensive knowledge built up over 30 years combined experience in the motor and finance industry that can advise and help you choose the right method of finance and leasing to suit your needs. Below is a guide to the funding options available through Carleasing-online.   Also see our frequently asked questions for more information regarding finance plans.

Products Quick Links:

Personal Contract Hire
Personal Contract Purchase 
Hire Purchase 
Contract Hire 
Finance Lease 
Sale and Leaseback

Personal Contract Hire

Personal Contract Hire (PCH) applies exclusively to private individuals and is the most common form of car leasing.  The agreement is based on a fixed term, usually 3 or 4 years during which time you make monthly payments to the leasing company.

When the contract expires you simply return the car to the leasing company and you're free to take out a new agreement on another brand new car.  As a result, you never have to worry about the future value of the car because you have the option to simply return the vehicle and walk away at the end of the contract.*


Personal Contract Purchase

Personal Contract Purchase (PCP) is similar to Personal Contract Hire but with one significant difference.  PCP gives you the option to purchase the vehicle at the end of the contract by paying the final instalment - often referred to as the balloon payment.

Agreements are generally based on 3 or 4 year contracts during which time you make fixed monthly payments to the finance company. 
At the end of the contract you can simply return the car and take out another agreement on a brand new vehicle, purchase the car for the pre-agreed balloon payment or simply return the vehicle and walk away. *


Hire Purchase

Hire purchase offers a method of funding the entire cost of the vehicle (minus any initial deposit) over a fixed term between 1 to 5 years and at the end of agreement you will own the vehicle.  The amount of deposit you pay is normally between 10-40% of the car’s cost.

Monthly payments are generally a lot higher than those of a Personal Contract Hire or Personal Contract Purchase as you are paying the full cost of the vehicle in order to take ownership at the end of the contract.

Many consumers find PCH or PCP more appealing than Hire Purchase as it allows them to drive a more valuable car for the same or lower monthly repayments.


Contract Hire

Contract Hire allows you to hire company vehicles for a pre-determined period, usually 2 or 3 years, at a fixed monthly cost depending on the annual mileage and future value of the vehicle.

The leasing company retain ownership of the vehicles throughout the entire contract and therefore take all of the associated risk of depreciation.

Contracts will generally include a full maintenance package and road fund licence is provided for the duration. Contract Hire removes the administrative burden associated with running a fleet as the leasing company supply, service and dispose of all vehicles.


Finance Lease

A Finance Lease is a contract based upon a pre-agreed period and simply finances the acquisition of a vehicle and is usually accessed by VAT registered businesses and companies.  The monthly rental is determined by the initial cost of the vehicle, the term of the agreement and the future value of the vehicle at the end of the contract - often referred to as the residual value.

At the end of the contract the vehicle is sold to a third party and a payment equivalent to the residual value must be made to the leasing company.  Generally the lessee is entitled to a proportion of the sale proceeds.

You will never take ownership of the vehicle and the depreciation risk is taken by you rather than the leasing company as it is with a contract hire agreement.


Sale And Leaseback

If your business is already in ownership of a fleet of vehicles, then Sale and Leaseback could give your company an instant cash injection.  You can release the capital tied up in your fleet and redirect it in to your core business.

The process is fairly simple.  The leasing company will calculate the value of each vehicle in your fleet and buys them from your at market value. They then lease the vehicles back to you on Contract Hire or even replace them with new vehicles on Contract Hire.  Further depreciation of your fleet is no longer a concern.


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Car Leasing Online is a trading style of Mercury Vehicle Solutions Ltd, Registered Office: B1 Stanlaw Abbey Business Centre, Dover Drive, Cheshire, CH65 9BF.

Registered in England No: 6876840, Mercury Vehicle Solutions Ltd are a credit broker and not a lender, we are authorised and regulated by the Financial Conduct Authority (FCA) for credit broking activities.
Our registration number is 654819.