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How car leasing works

More about leasing

Frequently asked questions

  • Whether you buy or lease your next car is purely down to you. Factors that you should consider are your budget, your mileage and your personal preference on owning a car.

    If you choose to buy a car, you’ll have full ownership of the vehicle, with fewer limits when you configure the trim and style of your car. Remember you can buy a car on finance and pay monthly, rather than buying in cash.

    That said, you’ll have to factor the depreciation of the car when you sell it. Depreciation is the rate at which your car’s value drops over time. This isn’t an issue if you lease. Leasing is a good choice for those who want to drive a brand-new car every few years without owning one. It can work out cheaper per month than buying on finance or in cash.

  • Leasing is a popular way to get a new car, but it isn’t right for everyone. Here are some advantages and disadvantages to keep in mind when making your decision.


    • The initial payment is usually low
    • You’ll typically have lower monthly payments
    • the vehicle is normally covered by a warranty
    • You don’t have to worry about the car’s depreciation


    • You’ll never own the car
    • You’ll face penalties for excess mileage
    • Most contracts include fees for terminating early
    • You may have to pay more for specific colours or trim levels

  • The higher your credit score, the better a lease deal you are likely to be offered.

    Remember that how your credit score is measured can vary depending on the credit report you use. Similarly, lenders will have different criteria so shop around and get different quotes.

  • There are sometimes extra fees and costs involved in leasing a car. Your agreement may include:

    • An initial payment usually equivalent to 3 6 or 9-months’ payments
    • Administration fees, which can be on average around £300
    • Late payment fees
    • Excess mileage fees (sometimes per mile) · Maintenance fees on anything over fair wear and tear, to be paid at the end of the lease

    Also remember that prices listed don’t always include VAT, which you’ll have to pay unless you are a VAT-registered business.

  • With personal contract hire (PCH), you’ll never legally own the car; essentially you’re just renting it. You pay an initial deposit then make monthly payments to drive the car. At the end of your contract, you simply hand the car back.

    If you want to make monthly payments but have the option to buy the car at the end, take a look at personal contract purchase (PCP) deals. We have a range of car finance deals but it’s important to find the best option for you.

  • You’ll have to speak to your preferred car lease company and see if they offer test drives.

    If this isn’t an option, you should be able to arrange a test drive through the manufacturer’s website or a local dealership. As car lease deals can sell out quickly, we advise you create a shortlist of cars to test drive in advance, so you can make an informed decision while the best deal is in front of you.

  • Very few lease car contracts include insurance, so you’ll need to arrange this yourself.

    When you take out an insurance policy, you’ll need to let the insurance provider know that it’s for a lease car. You’ll also have to share the terms of the lease, alongside the name of the car’s ‘registered owner’ (normally the lease company) and the names of any additional drivers.

    You can learn more about insuring a lease car here.

  • You have to return your car at the end of your lease. You’ll need to arrange collection with the lease provider in advance. Be sure to perform a thorough check of the vehicle before it’s due to be returned so you have enough time to make any repairs outside of fair wear and tear. You should also check you have all the relevant paperwork.

    Learn more about returning a car lease here.

  • Check with your preferred lease provider whether they accept a part-exchange of your current car towards the initial deposit. If they don’t, you can easily sell your car on Auto Trader before your car lease is due to start.

  • If you’re not looking to part-exchange your car, you can sell it using a private ad on Auto Trader. You can create and upload your advert in just three steps, and get your car in front of more buyers than on any other site.

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