Car Leasing for Personal Use

We look at everything you need to know about car leasing for personal use...

Car leasing has been around in the UK since the 1990s, but it was only really available to business owners. However, that has changed in recent years, and personal leasing has become increasingly popular. So popular in fact, that Personal Contract Purchase is one of the most popular ways of getting a new car for private individuals.

So it’s safe to say that personal leasing is on the rise. Despite its popularity, there are many who don’t really know what it’s about or what it entails.

In this article, we are going to talk about car leasing for personal use including what options are available to you, the pros and cons of personal leasing and how to go about getting a car lease.

Car leasing for personal use

There are two options available to you if you are looking at car leasing for personal use; Personal Contract Hire and Personal Contract Purchase.

What is Personal Contract Hire?

Personal Contract Hire is what people often refer to when they talk about leasing and how it works is very simple;

You have your chosen car for a set period of time, usually 2-3 years but it can be less or more time. During this time you make fixed monthly payments while also sticking to a set mileage and keeping the car in a good condition. Once that time is up, you hand the car back with nothing more to pay (subject to mileage and condition restrictions).

What are the pros and cons of Personal Contract Hire?

There are plenty of advantages of Personal Contract Hire, for example;

  • You get a brand new car every few years
    • New cars are more reliable, more economical, safer, and come with the latest technology.
    • With Personal Contract Hire, you get a brand new car every few years
  • You don’t have to worry about depreciation
    • You hand the car back at the end of the contract and don’t have to worry about the car depreciating while it is in your ownership
  • You don’t have to worry about disposing of the car
smiling couple with dark hair with man driving a car
  • You can often afford a nicer car
    • This is because when you lease a car you do not pay for the full car. You only pay for how much it will depreciate when it is in your ownership. Often, cars such as Mercedes’ and BMW’s depreciate slower than other brands, therefore they are much more affordable to lease than people think.

However, there are disadvantages, these include;

  • You don’t own the car at the end
    • When you get a Personal Contract Hire, you go into the contract with the intention of handing the car back. This is either a good thing or a bad thing depending on who you talk to
  • You are subject to mileage and condition restrictions
    • When you lease a car you agree to a set number of miles. If you go over that mileage then you will be subject to an excess mileage charge. This can vary between 1p/per mile+VAT to £1/per mile+VAT.
    • You also have to keep the car in a good condition. We’re sure that you will, but this condition has to be in line with the BVRLA Fair Wear and Tear Guide. This is the industry standard for all vehicles on their return.
    • If you do not, then you could face additional fees.
  • You have to get the car serviced throughout
    • This is an additional cost that you will have to budget for throughout.
    • However, you can stagger the cost by getting a maintenance agreement.
Unsure what's included in the maintenance agreement? Don't worry we have that covered, explore now

You can read more about Personal Contract Hire here or watch our video below.

What is Personal Contract Purchase?

Personal Contract Purchase works the same way as a Personal Contract Hire in that you have your vehicle for a set period of time while paying a monthly fee. However, at the end of the contract, you have three options;

  • Hand the car back with nothing more to pay
    • Subject to mileage and condition restrictions
  • Part-exchange the car
  • Purchase the car for a pre-agreed value
    • This is the Minimum Guaranteed Future Value and is set at the beginning of the contract

So there is a degree of flexibility in terms of what you can do at the end of a Personal Contract Purchase.

What are the pros and cons of a Personal Contract Purchase?

There’s a reason Personal Contract Purchase is so popular. For example;

  • It’s flexible
    • If you aren’t sure whether you want to hand your car back or buy it at the end then Personal Contract Purchase is  perfect for you
    • You also don’t have to make a decision until the end of the contract so you have plenty of time to think about it
young women wearing sunglasses smiling in a car
  • You know how much the Minimum Guaranteed Future Value will be at the start of the contract
    • This means that you can budget for it should you decide you want to own the car at the end
  • The monthly payments are less than if you were to get a finance scheme         
    • You still aren’t paying for the whole car on a Personal Contract Purchase so the monthly payments are often less than if you were get a vehicle on a finance scheme

However, there are also some disadvantages. These include;

  • You are still subject to mileage and condition restrictions
    • This is because the finance house does not know if you are going to buy the vehicle or hand it back. So you will have to have a pre-agreed mileage and keep it in a good condition.
  • You don’t own the car until the end of the contract
    • This means you still have to get the car serviced throughout and have fully comprehensive insurance.
  • It can be more expensive than a Personal Contract Hire
Learn more about how Personal Contract Purchase is calculated here

How do I get a personal lease?

There are a few ways in which you can get a personal lease.

You can either go through a dealership, look online, or you can go through a vehicle broker.

How do I get a lease car through a dealership?

Going through a dealership to get a new car, whether you are leasing or buying, is the more traditional way of getting a car.

You choose which brand you want to lease, and preferably what model. You then head into the dealership, choose which car you want and which trim and specification. They will then offer you a deal. It’s as simple as that.

If you go through a dealership then you are limited to just the one brand. However, there is a chance you can get a very good deal if you catch the dealership at the right time. If there is a new model coming out and they need to clear their stock, dealerships have been known to make a loss simply to get the vehicles out. This isn’t always the case, however, but we have known it to happen.

You can also sign all the paperwork and drive away with the vehicle there and then (if the car is in the dealership ready to go) which you cannot do if you go online or via a vehicle broker. So if you are in need of a car urgently, then a dealership is great.

However, you are not likely to get an unbiased opinion and therefore might not be getting the best deal for your situation. Also, dealerships are limited to only a few funders, so again, you might not be getting the best deal for you.

How do I get a lease car online?

As leasing has become more popular, so have leasing websites. These online companies essentially act as the middle-man between you and the dealership.

You put in the details of what car you want, the spec, the trim, and your budget. Then, dealerships pretty much bid for your business. You choose which one you like the best.

If you don’t want to go into a dealership or talk to a salesperson, then you might find this route appealing. You can do everything in the comfort of your own home and you don’t have to talk to anyone if you don’t want to. You also get an honest opinion.

person sitting at a wooden table with a takeaway coffee looking at car deals on an ipad

However, you do have to ensure that the company you are going through are legitimate. You should check their accreditations and make sure that they are experienced and trustworthy. You should also be aware that they may not have a customer service process in place should something go wrong. These companies might not have someone on the end of the phone which is not the sign of a trustworthy company.

How do I get a lease car through a vehicle broker?

As we said, vehicle brokers have become more popular as leasing has become more popular. They, like an online company, work as the middle-man between yourself and the dealership.

You tell them your requirements and then they go away and negotiate the best deal for you. They will then present you with options and you choose the best one.

An advantage of going through a vehicle broker is that many are independent, and can therefore give you an honest opinion of what is best for your situation. Experienced vehicle brokers also can have access to a wide range of funders, meaning they can get the best deal for you and your situation

Each option suits different people, so whichever you choose make sure that it is the best for your situation.

Have you asked these 7 questions to  ensure you secure the right Vehicle Broker?

It should also be noted that if you have bad credit, your best bet is going through a vehicle broker. They will often have contacts with funders that work specifically with those who have bad credit.

However, you will again have to check the accreditations before you choose a vehicle broker. This is because there are some brokers that do not have the experience or the customer service process in place to give you the best service possible. You can read more about what accreditations to look for in a vehicle broker here.

Also, you will not be able to drive away with the vehicle there and then. Vehicle brokers do not have showrooms or forecourts. This means that if you want to test drive a vehicle then you will have to go into a dealership.

Each option suits different people, so whichever you choose make sure that it is the best for your situation.

In conclusion, there are two types of personal leasing options available to you; Personal Contract Hire and Personal Contract Purchase. Each have their pros and cons and are suited to different people. You can get a personal lease either by going to a dealership, looking online or going to a vehicle broker. Again, each option has their merits but they also have downsides as well. Hopefully, though, this has given you an idea of car leasing for personal use, what options are available to you and what it entails.

Ready to get on the road in a new car? Take a look at our brand new special  offers today

Holly Martin

Content Co-ordinator at OSV Ltd
Holly enjoys: Reading, music and spending time with friends.

Within a week of Holly starting work at OSV she became an indispensable part of the marketing team. She's very intuitive and gets on with the whole office effortlessly.
Holly Martin

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