Never Leased Before......Read This First. 5 Questions to ask yourself.

26th Oct 2022

Leasing a vehicle is a great way to get into the latest models but there are some things you should know before you sign on the line. You might want to take notes....

Is it time? you have avoided the whole lease thing to this point but all the best deals seem to be lease deals? We get it, it's a bit more complicated than paying cash and the 'If it ain't broke don't fix it' approach works well, but take your time and it really can be a fantastic way to make your budget punch above its weight, and sometimes we are talking flyweight budgets for heavyweight metal but make the wrong choices and you can soon get knocked out (Enough with the boxing metaphors, literally nothing to do with cars and we know nothing about boxing.... we don't even know why we started it.) Anyways, back to the leasing, it's good to figure out if you are suited to the product features before you start looking for the best leasing deals. Do this and it might save you a lot of time and conversations (there are usually lots of conversations!). It will help pin down exactly what you want and make it easy to compare the right type of car leasing offers for you.

Are you comfortable with how to compare the hundreds of thousands of broker produced leased deals you will be offered?

We're not gonna lie, it's a minefield. Even the very best Brokers and Leasing companies (and there ARE lots of good ones) can offer information that's confusing, not because they intend, to but simply because they all offer it in different formats and media and let's face it, it's a complex subject (just take a look at a contract or the fair wear and tear guides for proof!).

If you are not that comfortable, then you are in good company. Read this guide first. It will help you navigate the journey.

Do you know EXACTLY how much it will cost you?

We have written a separate post on this topic as there is lots to consider but in a nutshell, you need to add up the Total Cost of Ownership. That's initial rental, all the subsequent payments and then start to factor in liability around excess mileage and damage charges (More on that in point 4). There is also the taxation benefits if you are running a business or using salary sacrifice schemes to include in the mix.

Are you a company and can you claim the VAT back or are you using Salary Sacrifice?

Leasing is a really tax efficient tool if you can claim VAT back and write off some of the rentals against corporation tax or if you have a salary sacrifice scheme which takes advantage of low Benefit in Kind vehicles. They are both subjects in their own right but for now it's enough to know that big benefits exist, but you must talk to someone who understands how it works to make sure you qualify. It does not mean that Personal Leasing doesn't work and cannot be a great deal but if there are tax incentives on offer then it can sweeten the deal and lower the Total Cost of Ownership.

Are you OK with NOT owning the vehicle at the end?

Contract Hire (Personal PCH and Business BCH) deals are essentially rentals (hence the hire bit!). They were not designed for you to keep them at the end. You don't actually own the vehicle, the leasing company does. There are ways in which you can acquire the vehicle but it will be at a fair and open market value and after you have terminated the agreement. We will do a post on the best way of doing this soon.

Bonus Question

Do you understand how the end of contract charges ACTUALLY work?

When signing a Contract Hire (Business or Personal) you are agreeing to certain legal obligations. Amongst those are clauses pertaining to the condition of the vehicle upon return. The leasing company does not expect the vehicle back in showroom condition, however the return standards are VERY specific . There is an industry agreed 'Fair Wear and Tear Guide' which outlines 'Acceptable Damage' anything outside of this and you are liable for charges (The guide is 22 pages long and extremely detailed) Some leasing companies publish their charges outside of acceptable wear and tear, other don't. (Spoiler Alert, this is why we created wondle!). It's important to be able to navigate if you do not want to receive a potentially nasty end of contract surprise.

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