Top 5 problems with Personal Leasing

We look at some of the problems you might encounter with personal leasing...

Car leasing has been around for some time now, since the 1990s. However, at that time, it was only really available for business owners who wanted a fleet of company cars.

Now, however, leasing for private individuals has grown 55% in the past few months, according to the BVLRA and is now one of the most popular way of getting a new car. Personal leasing is on the rise, which has led to an increase in people asking about the concept of leasing and what it entails. One of the questions many people ask is ‘what’s the problem with car leasing?’

There aren’t that many problems with personal leasing, which is why it is so popular. It works for pretty much anyone. However, that’s not to say there aren’t a few problems that you should be aware of.

At OSV, we talk to people who are unsure whether they want to lease or buy every day. And we think it’s important that you know as much as possible about each to make the right decision, including the negative aspects.

So in this article, we are going to look at the top 5 problems with personal leasing, and how to solve them.

1. There is too much choice

As I’m sure we all know by now, there is such a thing as too much choice. With the evolution of the internet, we are now faced with more choice than we ever have been before, and that includes cars.

You now don’t have to drag yourself from dealership to dealership, talking to salesperson after salesperson, getting quote after quote, to find the best car and the best deal for you. Now, all you have to do is pop online and you have a range of quotes on every single car you can dream of.

Another thing about car leasing that people tend to discover is that it is often cheaper than buying a vehicle. This is because when you lease a car, you are essentially paying for how much the car depreciates while it is in your ownership. This is opposed to a purchase scheme where you pay for the whole vehicle but stagger the cost over a period of time.

Want an in-depth explanation of how Lease prices are calculated? Waste no more time and find out today

The fact that leasing is more affordable than people often think opens up even more opportunities, as people realise they can often afford a nicer car than they originally thought. So yes, there is such a thing as too much choice, and that is one of the main problems with personal car leasing.

The solution

There isn’t much of a solution for this one, apart from simply being prepared when you do start looking at quotes.

We would suggest looking at your current car. What do you like about it? What would you improve? Do you need a larger car for a growing family? Or do you want something a bit sportier now the kids have cars of their own?

You also need to think about how long you want the vehicle for. When you lease a car, you can have the vehicle for anything up to about 5 years. Therefore, you want to think about whether you will want to have a shorter contract or whether you like having your car for a bit longer.

Once you have done that, you have a rough idea of what you are looking for and then you can start doing your research online. There are so many cars that it can be overwhelming, so having an idea of what you want will make things much easier.

2. Where to get the vehicle

Traditionally, you would go to a dealership to get your vehicle. However, the rise of leasing and the internet has paved the way for the rise of vehicle brokers. So now you are faced with another decision; which one do you get your car from?

If you go through a dealership then you have to be sure on what brand you want. Otherwise, you will have to be prepared to travel to several dealerships on your Saturday to talk to sales people and get lots of quotes. You also won’t get an unbiased view because each dealership will tell you that they have the best deal. However, if you go through a dealership then you can test drive the vehicles there and then. And, you might still get a good discount because of the relationship the dealership will have with the manufacturer. However, dealerships often don’t have access to many finance houses, which means that you might not get the best deal for your situation.

Young couple with car dealer in auto salon

If you go through a vehicle broker, however, then you don’t have to leave your own home. You can do everything over the phone. Many vehicle brokers are independent, which means they can give you an honest opinion about what they think is best for you. Experienced vehicle brokers also have strong relationships with many finance houses, which means that they have a high chance of getting you a bigger discount. However, if you want to test drive a vehicle, you will still have to go into a dealership. You will also have to wait for your car to be delivered, you can’t just drive away with it there and then because vehicle brokers don’t have showrooms full of cars.

The solution

The solution is to really do your research and decide which is best for you. Both options are good, but they are suited to different people and different situations.

Dealership vs. Broker; Which is best? We weigh up the two here

3. You have to decide on your mileage

When you lease a car, you have to stick to a pre-agreed mileage. Generally, this is anything up to 30,000 miles a year. If you go over this mileage, then you will be subject to a charge, called an excess mileage fee.

Deciding on your mileage can be tricky because it can greatly affect how much your lease contract costs. The higher the mileage, the more the vehicle will depreciate, the higher the monthly costs.

Some people think that it is better to go for a higher mileage instead of risking an excess mileage fee, but this is not always the most viable option. The excess mileage fee can cost anything between 6p+VAT/per mile to £1+VAT/per mile. So if the excess mileage charge is on the lower end, sometimes it is worth going over your mileage by a little bit, rather than pay for an extra 5,000 miles, which can greatly increase your monthly payments.

excess mileage

The solution

We suggest having a look at how many miles you have done in your current car. Are you likely to do that many for the duration of your lease contract?

You can also increase your mileage but you cannot decrease it. You can increase it after the first year. Therefore, if you really aren’t sure, we suggest going for a lower mileage and then if you do go over it in the first year, you can always increase the mileage for the rest of the contract. It’s better to increase it rather than not use all the mileage and end up paying for it anyway.

4. You have to get it serviced

With a lease car, you are contractually obliged to get the car serviced. How often this happens depends on the manufacturer’s guidelines, but you have to make sure that it is serviced at the required intervals.

Man handing keys back at end of his lease agreement.

You will also have to pay for the servicing yourself. And, as per the manufacturer’s guidelines, the chances are you will have to get your vehicle serviced at a franchised dealer. This is opposed to a third-party garage you may have got your car serviced at in the past. If you do not, then you could face additional charges.

The solution

Getting your car serviced can be pricey, and you might not want to part with that much cash in one hit. Therefore, one solution is to look at a maintenance agreement.

A maintenance agreement is an additional cost on top of your monthly payments that covers the cost of the servicing for the duration of your contract. It essentially staggers the cost so you don’t have to pay for it all in one hit.

This is a great option for those who don’t want to spend a lot of money when the time comes for the servicing, as has already been covered.

Unsure what's included in the maintenance agreement? Don't worry we have that covered, explore now

5. You have to keep the vehicle in a good condition

When you lease a car, you have to keep it in a good condition. This has to be in line with the BVRLA Fair Wear and Tear Guide. The BVRLA Fair Wear and Tear Guide is the industry standard for the condition of all lease vehicles upon their return.

If the vehicle is in a condition that is outside of the guidelines, then you will face extra charges.

The solution

When your lease car is due to be returned at the end of the contract, it will undergo an inspection. Before this inspection, we recommend going over the car thoroughly, while referring to the Wear and Tear Guide. Treat the vehicle as if you were going to buy it, and anything that you would pick up on, get it repaired.

The reason being is that you can then find a garage that will do the cheapest repair. The finance house might not be so kind, so you could end up paying more if you let it go back in a condition that is outside of the guidelines.

So those are the top 5 problems with personal leasing. As you can see, they are mainly due to the huge amount of choice and options you have when looking at a lease car, including what vehicle you are going to choose, the mileage and whether you are going to go through a vehicle broker or a dealership. Hopefully, though, this has given you some idea of the problems you might encounter and how to solve them. As we said, we go through these problems on a regular basis with customers, so if you have any questions then don’t hesitate to contact us.

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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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