Leasing is becoming an increasingly popular method of financing a new vehicle, but the question many people are asking is… “Which is the best value lease for me?”
In this blog post we’ll discuss the different types of leasing, as well as getting the best value for money. We’ll start with an overview of the three typical contract types before giving you some tips on how to keep your monthly payments low. So if you’re already clued up on the technical details, feel free to skip ahead!
Leasing is the most straightforward of the three to grasp and understand. Simply choose a vehicle, decide how long you want to keep it for, put a deposit down and drive away. You then look after the vehicle like it’s your own and pay monthly for the benefit of its use. When the leasing period is over the car or van goes back before you start again with a new one. A downside to bear in mind with leasing is the possibility of going over your mileage restriction which is agreed at the start – doing so could prove costly.
A variation of leasing is lease purchasing. Everything here is the same, except you will own the vehicle at the end of the lease. This is a great way to finance a new vehicle that you might not be able to pay for in full up front as payments are broken down in to smaller, manageable amounts. There is normally a balloon payment at the end of the term to buy the vehicle, but this can be reduced by paying more each month throughout the lease.
Contract hire is more suited to fleet vehicles or those covering particularly high mileages. Normally contract hire includes other features that you don’t get in a normal lease, such as servicing and maintenance and this all comes at a fixed monthly cost. The overall concept is still broadly the same though, and you’ll hand the vehicle back for a new one when the contract comes to an end.
How to keep your payments low
1) Don’t be too fussy
By keeping an open mind about vehicle choice, you might just snap up a bargain. Cars and vans often become available at short notice, so if you if you aren’t too fussy about specs and colours you can increase your chances of staying within budget. Otherwise you might be waiting a long time!
2) Longer leases are more affordable
The longer the contract, the lower the monthly payments. This is because the cost of running the vehicle is spread over a longer period of time.
3) Make a high initial deposit
A larger deposit equals a lower risk in the eyes of the lender. By putting more down at the start means that your monthly payments will be further reduced.