Like any form of paying for a car, leasing has its pros and cons. In this article, we’ve listed the benefits and disadvantages of Personal Contract Hire (PCH) to shed some light on leasing a car – have a look and decided if it’s for you. Remember that carwow can help you get a great deal however you choose to pay for your next car, just create and account and login to browse our deals.
Check out our other leasing guides for more information:
- Should you lease or buy your next car?
- What are the extra costs of a lease?
- What happens at the end of your lease?
- Leasing jargon buster
- Should you lease a car through a dealer or a broker?
- Does leasing a car affect your credit score?
- Why is business leasing cheaper than personal?
Advantages of car leasing
Leasing allows you to get a brand-new car on your driveway for what is usually a lower monthly cost than other finance methods. Because you’re essentially renting the car, you don’t have to worry about depreciation and can just change into another new car at the end of the rental period. Most lease deals are only two or three years long, with no pressure to buy the car at the end of the agreement.
At the end of the contract, you simply hand the car back to the finance company with no costs to pay (providing you’ve kept to the T&Cs – more on that later), or start afresh on another contract with monthly payments. It means you’re not tied down to a long contract and there’s very little long-term commitment involved. You’re free to move on without having the hassle of selling or trading the car.
Because PCH deals are on brand-new cars, they’re still covered under the manufacturer’s warranty. The length of the contract normally means that the car is warrantied for the entire duration, so you don’t have to worry about potentially expensive repair bills. New cars are far less likely to have faults but, if something does come up, the lease company should sort it out and get it back to best condition. You might be offered ‘gap insurance’ as part of the contract, which means you don’t have to pay the rest of the contract if the car is stolen or written off.
The monthly costs of leasing a car can often be lower than the costs involved in PCP finance deals, because there’s not really an option to buy the car at the end of the PCH deal. Think of it as renting the car for a couple of years, like renting a house instead of paying mortgage payments. Besides the initial rental (which is sometimes cheaper than a finance deposit), there aren’t any extra charges and it means you can drive a new car, or a more expensive and better-equipped car, for less money than you might expect.
Disadvantages of car leasing
Just like with renting a house instead of buying it, you won’t own your leased car. The payments are lower for a reason – you get nothing back at the end of the agreement. One of the major benefits of buying a car on finance is the possibility of being able to drive it without any extra costs after you’ve paid off the finance, whereas you’ll always be paying for a lease.
You’ll also need to make sure any damage is repaired before you hand your lease car back. While you probably won’t have to pay for mechanical elements that are covered by the warranty, the leasing company will expect the car to be returned in good condition and so you’ll get charged if you give it back in a bit of a state. Similarly, you’ll be shelling out if you exceed the mileage limits set out in your contract.
The terms of a lease are quite restrictive. As well as these potential extra charges, you’ll have to pay more if you want to hand the car back before the end of the contract, which can be a substantial amount. The lender will also want to make sure you can manage the monthly repayments, so you could be subjected to a thorough credit history and may be rejected from a lease deal if you’ve not got a great score – but this is also the case for other forms of car finance.
Finally, you’re not allowed to make any modifications to the car or, if you do, you have to make sure the car is returned in the same condition and with the same equipment as when you started the lease.
Should I lease a car?
Leasing could be the perfect way into driving a new car and avoiding the hassle of selling it when you don’t want it any more. However, it’s not for everyone, so you’ll need to weigh up whether it’s for you and if you like the look of it.