Like any other form of financial plan for paying for a car, leasing comes with its own set of pros and cons. In this article, we thought it would be useful to list the main benefits and disadvantages of taking out your own Personal Contract Hire (PCH) to shed some much-needed light on personal car lease deals.
Main Advantages of Car Leasing
If you choose to lease your new car model, this can help you to get a brand-new car on your driveway for what is generally a much lower monthly cost than what other finance options offer. As you are essentially renting your new car model, there is no need to worry about any depreciation, as you are able to simply switch this out for a new car when your rental period ends. Also, the vast majority of lease deals will last only two or three years and there is no pressure to purchase the car at the end of the agreement.
At the end of your lease contract, you will have the option to simply hand back your car to the finance company with absolutely zero costs to pay. Alternatively, you also have the option of starting afresh with another car lease contract with easily manageable monthly payments. This ensures that you aren’t tied down to any long contract and there are very little long-term commitments associated with this type of arrangement.
All PCH deals are made on brand-new cars. This means that your lease car will typically be covered under the manufacturer’s warranty. The standard length of any car lease normally means that your new car will remain under warranty for the entire duration, so there is no need to worry about being stuck with any costly repair bills. Some car leases will now offer customers ‘gap insurance’. This means that you will not be required to pay the rest of your lease contract if your car is either stolen or written off.
Typically, the monthly costs associated with leasing a car are often far lower than the cost you will find in PCP finance deals, as you will not be given the option to purchase the car you are renting at the end of your agreement. Other than the initial upfront rental cost, which can often be a lot cheaper than a finance deposit, there are no additional costs to worry about.
Disadvantages of Car Leasing
Just like with renting a flat or a house instead of owning it, you won’t own your leased car. Your monthly lease payments are often a lot cheaper for one main reason – you don’t get anything back at the end of your agreement.
You will also need to ensure that any damage to your lease car is repaired before you hand it in. While it is very unlikely that you will have to cover any costs for mechanical elements in your car, you may have to pay an extra fee if you hand your car back in a poor state.