Your next new car: Why leasing is more convenient than purchasing
It’s becoming more and more common these days for drivers to lease rather than purchase a vehicle. Such hire contracts allow customers to drive a new car for a relatively short period – and usually within its warranty period – before trading it in for a new model as its value depreciates. It’s also a cheaper option than taking out a loan to buy a car outright because, in the end, it often isn’t worth the cost to own something that has lost its value.
With PCP (Personal Contract Purchase) you have the potential to own an asset at the end of the lease term, which adds a calculated amount to your monthly bill. This amount, the Guaranteed Minimum Future Value, is worked out by the leasing company as they predict what the value of the vehicle will be once the term is completed. A personal car leasing contract does not give you the right to buy and is cheaper because of this, though there is a lesser degree of flexibility if you want to return the vehicle before the contract term ends.
For those who would prefer to change their means of transportation fairly regularly, buying is not the best option. A leasing contract can last for one year or between two and five years, which allows you more flexibility when you’re ready for something new. However, it’s becoming clear that the majority of people on PCP deals choose not to buy when the lease ends as they would rather rent something newer or try a different manufacturer or model, and as this hiring option is more expensive due to paying extra for the right to buy, a contract that doesn’t include this cost would have been a better deal.
One of the benefits of leasing is that you’ll only have to pay for fuel and insurance, as the road tax and servicing are paid for by the company. This isn’t the case with a PCP deal, where the customer must usually pay all of these expenses themselves. Of course, the newer the car the less likely it is that it will require regular maintenance.
Many leasing specialists have special offers on various models including Jaguar, Range Rover and Audi. There are a range of contracts and competitive deals available for leasing that let you enjoy driving without having the responsibility of financing a car that will depreciate in value.
The editorial unit