Don’t want to get into the hassles of owning a car? Leasing an automobile could be one of the options. Car leasing has seen an increase in the 21st century, especially with more and more millennials opting for a lease agreement rather than buying a car. However, every coin has two sides, and car leasing can be an issue if contracts are not read carefully. Read on to get acquainted with the pros and cons of car leasing in the UK.
Many leasing companies give you the option to use a vehicle for a particular period or mileage and return it at the end of the term. A few financial institutions also manage the maintenance of your leased car at an additional cost. Leasing a vehicle could be the best option if you would like to use a vehicle for not more than two to five years. Similarly, you can benefit from manufacturer’s warranties, lesser down payment, affordable instalments, and lower cost of ownership.
To Buy a Car on Lease in the UK: the Advantages
Most individuals are eligible for a lease plan. Once you have a steady job or a business, you can opt-in with a car leasing service. A financial institution may verify your documents and give you the amount you’re eligible for. Considering your lease amount, you can choose a car of your choice that fits your budget.
- Driving new cars at shorter intervals.
With the leasing scheme, you have a minimum amount of down payment and affordable instalments. And once your lease plan comes to an end, the financial institution gives you the option to opt-in for another vehicle. Usually, lease plans are for a period of two to five years, giving you the option to get yourself a new ride at shorter intervals.
- Road taxes and hidden charges are included.
A leased car is not bought in your name; the financial institution holds hypothecation. Therefore, all taxes and hidden charges are included in the down payment and monthly instalments. Plus, your initial costs for car leasing are lower than that of buying a car.
- Avoid auto service charges.
Car leasing agreements include auto service charges. Hence, you get the benefit of saving maintenance costs of ageing vehicles. Also, a leased car is as good as buying a brand new vehicle, so you don’t need to worry about a breakdown. Moreover, car leasing services include a manufacturer’s warranty. So, in the worst-case scenario, your car is covered under warranty and insurance.
- FIxed cost of running.
The amount mentioned in your lease agreement is fixed, including all maintenance and insurance costs. Thus, apart from paying for fuel, you know the exact amount you’ll be shelling every month on your vehicle. Knowing your running costs, you are under control and free from hidden charges and unforeseen expenses.
To Buy a Car on Lease in the UK: the Disadvantages
- You don’t own the vehicle.After buying a car, either in an outright purchase or through a vehicle loan scheme, you own the vehicle. Hence, you can sell your vehicle at any point and use the returns. However, a car leasing company holds the right to the car, and you do not own it. At the end of the term, the leasing company takes the vehicle back, and you do not get any returns.
- You have to make sure to return the car as per your agreement.The car leasing company may add certain terms and conditions about the health and mileage of the vehicle. If you overrun the car beyond the set mileage, you may incur additional charges. Also, auto service guidelines have to be followed, and you may have to pay for repairs or dents not covered in the agreement.
- High termination charges.When you buy a car on a bank loan, you can forfeit your borrowed amount by paying the bank upfront or after selling your vehicle in case of need. Banks usually have a nominal fee for terminating the contract. However, car leasing companies charge huge amounts as termination fees.
- Credit score.One needs to have a good credit score to get a car on lease. A poor credit score may reduce your chances of getting a vehicle through a lease plan.
While leasing a car is an attractive option for many, it also has its downsides. Make sure to carefully consider your options and the pros and cons of car leasing in the UK before deciding if you should buy or lease your new car.