How does car leasing work?

Leasing or Contract Hire (PCH is Personal Contract Hire) can be a simple way to drive your brand new car in exchange for fixed monthly payments. It is effectively a long term rental - simply agree the contract length, mileage allowance and initial payment, and the car can be delivered to your door! You won’t own the car, and at the end of the agreement you simply return it to the leasing company.

Are there mileage limits on leased cars?

There is an average annual mileage limit for car leases. These limits are typically set at the beginning of the lease agreement and are usually expressed as an annual mileage allowance. On Carwow, you can choose an allowance between 5,000 and 20,000 miles per year. You shouldn’t exceed the total mileage allowed over the contract term, as doing so will likely result in excess mileage charges.

What happens if you exceed mileage on leased cars?

Most lease contracts have an ‘excess mileage charge’ if you are over the agreed mileage at the end of the contract. This is normally a ‘pence per mile’ charge which will be stated in the contract hire agreement up-front. Be sure to check this before signing.

What is the best contract length for a car lease?

There’s no ‘best’ length, but most leasing deals run for two or three years.

Are leased cars covered under warranty?

If you choose to lease a new car, it’ll be covered by the same manufacturer warranty as if you’d bought the car outright. As a result, if any non-consumable parts (excluding brakes or tyres, for example) you’ll be able to get them fixed at a local dealership without paying a penny. Most new car warranties last at least three years, so, if your lease agreement is three years or shorter, your car will be covered for the entirety of your lease. This will depend on the length of the warranty offered by the manufacturer of each vehicle, so will be worth checking before you sign a lease agreement.

Do car leases include maintenance?

A standard car lease agreement typically does not include maintenance.. However, on Carwow, you can choose lease deals that include maintenance as part of the package.

Can you part exchange a leased car?

Not directly, but you can sell your current car and settle any finance before using any spare funds towards the initial payment of a lease deal. Most dealers will happily give you a value for your current car and many will buy it from you.

What's the difference between personal and business car leasing?

Personal Contract Hire (PCH) is for private buyers and prices include VAT, whereas Business (BCH) prices exclude VAT and are only available to companies.

What happens at the end of a car lease agreement?

Before your term ends, you’ll be contacted by the leasing company to arrange a day to return the car. Its mileage and condition will be checked to make sure you haven’t covered too many miles and that it hasn’t been damaged beyond fair wear and tear. Providing you return the car in an undamaged condition and you haven’t exceeded the agreed mileage you shouldn’t be liable for any surprise charges. Please check the terms and conditions of your lease for full details.

Is it better to lease or buy a car?

It depends on what you want — leasing rates can often be more affordable than a loan repayment, which is great, and many will also cover other regular costs. However, you won’t own anything at the end of the lease, and you have to stick to strict limits on mileage and car conditions. Have a careful think and work out which is better suited to you and your needs.

Is leasing a car worth it?

It certainly can be. Leasing often gives you worry-free and more affordable access to a new car, and often with only a small ‘deposit’. If you’re happy to stick within the terms and conditions of a lease, and you’re OK with not owning the car at the end of the deal, then leasing can certainly be worth it.

Car leasing

Q: What is the initial payment on a car lease?

The initial payment is the first month’s payment which is higher than usual and often calculated as either 3, 6, or 9 times the regular monthly amount. Similar to a deposit, it’s the part of the hire contract that you pay up-front. It is usually payable shortly after delivery and is non-refundable. After this initial payment in month 1, you pay the regular monthly payment for the remainder of the contract.

Q: Does car leasing include insurance?

Insurance is not included on Carwow. You should arrange car insurance as normal for your lease car, making sure to tell the insurance company that it is leased.

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Car leasing FAQs

How does car leasing work?

What is the initial payment on a car lease?

Are there mileage limits on leased cars?

What happens if you exceed mileage on leased cars?

What is the best contract length for a car lease?

Are leased cars covered under warranty?

Do car leases include maintenance?

Does car leasing include insurance?

Can you part exchange a leased car?

What's the difference between personal and business car leasing?

What happens at the end of a car lease agreement?

Is it better to lease or buy a car?

Is leasing a car worth it?

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