Car leasing problems

Car leasing has become hugely popular recently, and is now one of the most common ways of getting a new car for business and private individuals alike.

While there are a huge amount of positives when it comes to leasing, it is not for everyone. There are some problems with leasing that means it is not suitable for everyone. While these are not problems for everyone, they are for some. And, it’s important that you know what these problems are before you decide whether car leasing is for you.

So in this article, we are going to look over some of the problems with car leasing, how they are solved, and whether leasing is right for you.

You need a good credit score

One of the main problems people encounter with leasing is that they need a good credit score. When you lease a car, you do not own it, the finance house does. They then essentially rent the vehicle to you while you pay a monthly fee.Therefore, the finance house need to know that you are going to make the monthly payments, and to do that, they will look at your credit score. If you have a history of making payments on time then the finance house know that you will most likely make their monthly payments on time.

However, if you have a bad credit score, then the finance house can’t guarantee that you are going to make the monthly payments. Therefore, it is harder to lease a car with bad credit. That’s not to say it’s impossible, but it will be trickier. Plus, you might not be able to get the best deals. This is because you are a higher risk, and therefore the monthly payments will often be higher.

The solution?

There are a few things that you can do if you have bad credit.

The first solution is to contact an experienced vehicle broker who has the expertise to work with those with bad credit. If you are honest from the outset about your credit score, then they will be able to help you and you still have a good chance of leasing a car. It might cost more, however, but you should still be able to lease a car. The second solution is suited to those who have a CCJ that is going to drop off in the next six months or so. If you have a CCJ that is about to drop off, and your credit report is pretty much spotless apart from that, then you might want to look at a Short Term Rental. This is different to a daily rental and works in the same way as a lease except it’s for up to one year. It might cost more than a long-term lease, but it will cost less than a daily rental. Once the CCJ has dropped off, you will be able to access better deals. This solution is also great because if you make the Short Term Rental payments on time then you are improving your credit score at the same time. It’s perfect. You can read more about a Short Term Rental here.

The third solution is looking at a cash purchase or a second-hand car. If you do not want to pay extra for a lease nor do you want to look at a Short Term rental, then there is a possibility that leasing isn’t your best option. In which case, you might want to either look at a cash purchase, where you buy a brand new car outright with cash, or buying a second-hand car. You can read more about buying a second-hand car here.

You can’t customise your car

When we talk about customising your car, we aren’t talking about choosing the colour when you order. We are talking about adding spoilers, sound systems, changing the trim, upgrading the engine, things like that.

If that is something that you want to do with your car, then leasing probably isn’t for you. This is simply because you do not own the car, and will not own it at the end of the contract. Therefore, the car isn’t yours to customise.

We’re sure you can understand this, and it makes sense as to why you can’t customise your lease vehicle.

Let us be clear though when you order your lease car and you opt for a factory order (read about factory order cars here) then you can choose the colour, the engine type and the trim of the vehicle. So you can customise your car within reason, and with the customisation, the manufacturer has provided.

The solution?

The best thing would be to either buy a car with cash, look at a second-hand car or you could look at a Hire Purchase.

A Hire Purchase is where you pay a fixed monthly fee for a set period of time. Once that time is up, the vehicle is yours to keep. This is a purchase scheme and is an affordable way to pay for a new car without having to pay in cash. https://www.youtube.com/watch?v=7JPPSrsUZ54

You can’t take your vehicle off-road

Similar to customising your car, a lease vehicle is not designed to be taken off road or for track racing.

Again this is for the same reason, you don’t own the car. You are also contractually obliged to keep the vehicle in a condition that is in line with the BVRLA Fair Wear and Tear Guide. This is the industry standard for all lease cars upon their return. If your vehicle falls out of the condition guidelines, then you face extra charges. If you take your vehicle off the road on uneven terrain that could potentially damage the car, then you have an increased chance of facing extra charges. Your alternatives again are either a cash purchase or a hire purchase. This is because you will own the car, rather than give it back.

Lease contracts are for a fixed term

Lease contracts are pretty rigid, or at least they are more rigid than some of their counterparts. This means that they are more difficult to end early or cancel.

Therefore, you should not go into a lease unless you are 99.99% positive you are going to see it out to the end.

In the event that you should have to cancel your contract early, here is what you will have to do:

Ring the finance house and tell them you want to end the contract early. They will then give you a termination fee. You will pay this and then the contract will be over. However, the termination fee can be pricey, it depends on how many months are left on the lease agreement. The termination fee will be down to the finance house. Because of this, we don’t recommend cancelling your contract.

You can read more about what happens if you cancel your lease contract here.

The solution?

The above is only the case on a Contract Hire. If you have a Contract Purchase then you can cancel your contract at any time as long as you have paid 50% of the total payable and it is a regulated agreement. So if you are over halfway through your contract and you can meet the above criteria, then you are within your rights to cancel.

If you have a Hire Purchase and you want to end the contract then all you have to do is pay the remaining finance and the car is yours.[vc_video link=”https://www.youtube.com/watch?v=ZPqgMrcEKIU”]

You have to get the car serviced

When you lease a car, you are contractually obliged to get the car serviced at a franchised dealer. You also have to pay for this.

How much the servicing costs and how often you have to get the car serviced will depend on the manufacturer. 

If you do not get your car serviced, or you do not get it serviced at a franchised dealer then you could incur fines and your warranty could become invalid.

Getting your car serviced will mean that you have to budget for the cost when the time comes, so that is something that you will have to consider.

The solution?

Unfortunately, you cannot get out of servicing your car, that’s an obligation that you have to meet.

However, you can get a maintenance agreement. This is a small fee on top of your monthly payments that will cover the cost of your servicing. It essentially staggers the cost for the duration of your contract so you won’t have to pay for the servicing in one hit, which can set you back quite a bit.

You have to get fully comprehensive insurance

One of the things that people are not necessarily aware of when they look at leasing a car is that you have to have fully comprehensive insurance, and that insuring the car is your responsibility.

You have to have fully comprehensive insurance because you don’t own the car, and are therefore a greater risk. That’s not to say we think that you are going to start racing the car on the motorway of course, but the finance house need to have that security that they are covered should something happen.

This also means that the other people who drive your car, such as your partner, sibling or child, will also have to have fully comprehensive insurance.

Can someone else be insured to drive my lease car?

As long as they have third party insurance, there is no reason why someone else cannot drive your lease car. You don’t even have to be the main driver. However, you do have to be the policyholder, so the insurance has to be in your name but you don’t have to be the one who drives the vehicle most of the time.

You can read more about insuring someone else on your lease car here.

The solution?

There is no solution to this, as those are the rules you agree to when you lease a car. However, we can help you out on finding the best insurance deal for you and your situation.So those are some of the common car leasing problems that you may encounter when considering whether leasing is right for you. All of them are solvable, apart from the ones that are contractual obligations and even then there are steps you can take that can make things much easier. Some of the problems that will arise are down to the fact that you do not own the car. If you want to customise your car or take it off-roading, then the chances are leasing is not right for you. However, there are other options available to you. Hopefully this has cleared a few things up in regards to car leasing problems that you might encounter.