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Car Leasing Explained

Car leasing is one of the most popular ways to purchase and finance your new car. Here in the UK it is estimated that nearly 80% of all new cars on the road are financed and used in this way. There are a number of reasons for this, principally it offers new car buyers a very cost effective way for them to get behind the wheel of a new car every 2-3 years. It also takes any stress or worry out of your motoring as all new cars come with full manufactures warranty.

When it comes to leasing your new car there are two main points to think about – are you a business customer or a personal customer? The main reason this is important is that business customers have their prices shown without VAT and personal customers have the VAT included.

There are a couple of different options and contracts available when it comes to leasing a car and in today entry we will try to explain them and make them as simple as possible.

Personal Lease:

PCH – personal contract hire is the simplest way of leasing a car as a private customer. You simply pay a deposit of between 3, 6,9 or 12 monthly rentals up front and then each month pay your agreed rental. At the end if the agreement the car is simply returned with nothing more to pay. This allows you have a nice new car regular.

PCP – personal contract purchase is similar to PCH, although at the end of the agreement you have the option to purchase the car.

Hire Purchase – This option essentially lets you fund the cost of the whole car, minus any deposit that you put down. Typically this option has higher monthly payments compared to the other finance options.

Business Lease:

Contract Hire – as with the PCH for private customers, contract hire works in a very similar way. The only difference being that all prices are plus VAT on business prices.

Finance Lease and sale and lease back are just some of the other options available for business customers, although contract hire is by far the most popular option.

I hope today’s entry has explained on some way the options that are available to you should you wish to purchase your new car with Car Leasing Online. If you are unsure or have any question then please do give us a call and one of our leasing experts will be on hand to help and advise.