It's a deal, it's a steal, it's the sale of the century, so why not take the plunge? Whoooaa there! Let's take this nice and easy.
TL;DR: Leases are long term commitments but it doesn't take long to check the essentials.
The leasing industry is brilliant at two things.
- Sourcing and presenting unbelievable deals, literally too good to be true rentals on amazing vehicles. Only, often they ARE true and in which case you SHOULD snap their hands off!
- Sourcing and presenting OK deals, like they are unbelievable but they are not really. They are not BAD deals usually, just OK deals but you really do not need to rush.
So how do you make sure you know the difference? In this post, we will talk about some of the hacks you should use to make sure the deal is right for you. (We will explain HOW these fantastic offers occur and how best to catch one for yourself in an another post.)
"They are not BAD deals usually, just OK deals but you really do not need to rush"
So here are our top 10 (Ten!) tips to check that the deal is solid
- Check the payment profile
- Check the contract length
- Check the mileage allowance and Excess rate
- Check the Fair wear and Tear policy
- Check the Vehicle specification
- Check the vehicle lifecycle
- Check the available colours
- Check delivery times
- Check the Broker and their Fees
- Check the Leasing Company and their T&C's
OK, so lets get going, this could be a long one (But worth it, right.... right?)
Check the Payment Profile
Payment profiles come in all shapes and sizes but they are almost always presented as multiples of monthly rentals. Even if a pound figure is given you can usually work it back to a multiple of a rental.
The usual approach here is to pay 1, 3, 6 or 12 rentals in advance. These are all well used and perfectly legitimate profiles but they do have impact on your monthly rental and especially for comparison purposes, it is important that you are comparing like with like. We have written a separate post on this here. It's very easy to get into long conversations with sales guys on the basis that you didn't pay attention to the payment profile when there are better deals elsewhere. The other point to mention on this topic is no deposit leasing or leasing with no advance payments. It's a heavily searched for term on Google but if you are looking for it, it may take you some time. I would point you towards rental products as this may be closer to what you are looking for. We'll do a post on the topic in the future.
Check the Contract length
Again, the contracts lengths vary but the standards are 24, 36, 48 and 60 month contracts. All have their uses and there is no best length for leasing cars so its important you give this topic some thought. Personal Contract Hire (PCH) especially is usually VERY expensive to get out of early. (Early Termination of lease contracts is probably the achilles heel of an otherwise fantastic product). There can be huge differences in rentals and Service, Maintenance and Repair (SMR) budgets on different term contracts, so for comparing the best lease offers it's another crucial point to check. Also, whilst we are on the subject, in our experience you are much better off deciding how long you want to keep the vehicle for and sticking to it. Don't fall into the trap of extending it to fit your budget, you may regret it for a number of reasons. You may get bored of it, it becomes expensive to maintain, better deals come along and there are others, don't do it unless you absolutely have to.
Check the Mileage allowance
There are 2 reasons mileage allowance are worthy of mention in this Top Ten list. One, is for the obvious comparison purposes. Monthly rentals can be severely impacted by mileages, some Manufacturers suffer from low resale value from higher mileages and this effects the price you pay per month. You won't get low monthly lease rates on high mileage contracts, it doesn't happen.
The second is a more operational reason. What will you actually use the car for? Long distance commuting or running around town with a visit further afield a few times a year? It's important you spend time working it out.
Excess mileage charges from leasing companies can build up quickly and this increases your total cost.
Furthermore, if you are doing high mileage in a lease car and you are not taking the fixed cost maintenance package, you need to budget for maintenance on top of your rentals (it's definitely going to need paying for either way).
What is a fair Excess Mileage charge? (or XS mileage as it is sometimes written) It depends on the Leasing Companies view of the impact of extra mileage on the vehicle. As we stated above, some cars are impacted more than others. It also depends on the maintenance contract you took. If the Lease Co is responsible for the maintenance it's going to be more (Quite rightly). It's not normally advertised but definitely check the figure before you commit. Likewise, should you take extra mileage in your contract (to be on the safe side) and you don't use it, you almost certainly will not get it back. This means you paid for the impact on the residual value of the intended mileage but the Lease Company gets the benefit. Hopefully you get our message. Take your time and figure it out.
The Fair Wear and Tear Policy
......Ah, fair wear and tear, the hours we have lost talking about this!
Firstly, it is super important but hardly ever talked about. It can easily mean the equivalent of another months rental in your total cost and it is vital you consider the impact of end of contract charges, most of which will be governed by the Fair Wear and Tear guidelines. We have written lots of posts on this (Spoiler Alert! This is why wondle and this website was created!) getting this right could save you many sleepless nights and hundreds of pounds in charges, so pay attention!
Most Lease Co's are members of the BVRLA (British Vehicle Rental and Leasing Association). They publish a Fair Wear and Tear guide which members (Lease Company's) stick to (mostly). Some have small variations and some have their own (similar) policies which they apply. When does a dent become a chargeable dent? How long does a scratch have to be, and if they are short but the are lots of them, what happens then? Bonnet paint chips on a low mileage vehicle lease? Should they be treated differently to a high mileage vehicle and what defines high mileage? Is there a damage waiver? If so how much?
Most of the charges sit between £650- £150 but can be in the thousands and between 40%-50% of lease customers get some sort of charge at the end of the contract so it pays to understand how it works. The other thing to know is that the process is not perfect, sometimes charges are made that shouldn't be and you need to be organised to be able to challenge unfair charges. You may want to look at wondle to see how we solve that problem.
Between 40%-50% of lease customers get some sort of charge at the end of contract so it pays to understand how it works.
Check the Vehicle Specification.
There are lots of models, lots of derivatives and they sound very similar. Often the top of the line sports models branding (BMW's M, Mercedes Benz AMG for example) are also used as trim specification lower down the food chain. It's branding but it can be confusing, its the same with engines, just keep an eye on what you are actually getting in the context of the range of vehicles. This requires a visit to the OEM's (Manufacturers) website to confirm. Make sure you know what you want and are getting quotes on that EXACT model. It can be the difference between getting the specification you really want (It's heated seats for us here at wondle!) and living with a cold bum for 4 years!
Check the Vehicle Lifecycle
Often an amazing leasing deal will be available because of the front end discount available on the vehicle. Why would a manufacturer start heavily discounting a vehicle? Well, one of the reasons is that the vehicle is coming to the end of it's lifecycle and an All-New model is about to be released. Is this a problem? Yes and No. Let's start with the No, it's tried and tested, probably full of extra goodies to help keep up the sales rate and it represents a massive saving on the Whole Life Costs of the vehicle. What's not to like? well, some people think vehicles date very quickly if there is a new version of the car on the market. Furthermore, by the time the lease ends there could be 3 or 4 years worth of the new model on the roads. For some people this is undesirable, others don't care. Which one are you?
Check the Available Colours
'You can have any colour as long as it's black' or something like that was said by Henry Ford and it can still be true today when dealing with Car Leasing bargains. Often a batch of physical cars are allocated to Leasing Companies and Vehicle Lease Brokers and because of this the colour choice is limited and gets narrower as the deals sell. It's not uncommon for colours to sell out, so be very clear on what you will and won't accept before the credit check. Once you leave a credit footprint, its quite a lot of hassle getting it removed and if you pull out of the deal and get underwritten else where, you start to leave multiple footprints and thats not always good for your credit ratings. Also, different paint has different costs. Often the cheapest paint finish will be the advertised price and those units sell first. The remaining stock may have much more expensive paint (Which mostly does not increase the residual value) This increases the monthly cost, so a paint finish with £1080 cost could add £30 per month to the rental. That can move the deal from WooHooo! to Meh! Be specific with the sales person as to what EXACTLY is available.
Check Delivery Times
You have secured a great leasing deal, the right colour, the right spec, it's all good right? Well, check the lead time carefully. With popular models in short supply this can stretch into months, in some cases nearly a year. Does this work for you? Can you extend your current vehicle? Can you take a rental vehicle?
Check the Broker and their Fees
A good leasing broker can make life very easy for you when selecting your next lease deal. They have multiple prices from lots of leasing providers, they sort out the cheapest and they offer it to you, not bad eh? That said, they do not work for free, they often charge either a fee of some sort (Admin, Doc fee etc.) and they include commission in the deal.
What really matters to you is the overall cost of getting the lease, including all additional fees and the service.
Service is a crucial part of a good broker and they all do it in different ways, some are 'Old School' and offer a phone based, personal service, others use a combination of web and call centres and some are now focused on digital ordering processes. Decide which one suits you best and narrow your supplier search based on that criteria.
The other thing to be aware of is that there over 50 leasing providers (The organisations that own the vehicle and take the asset risk) but hundreds of brokers (The organisations that resell leasing products) and hundreds of dealers (The organisations that sell vehicles to brokers and leasing companies). The potential combination of available deals run into thousands of permutations, so whilst many of the deals will be shared amongst brokers (only varying by the amount of commission or admin fees), many of them are genuinely unique, depending on the relationships and networks that exist between the players mentioned above. In short, the details matter, shop around and ask questions of the brokers, if the deal is unique they will be happy to show you how smart they are by explaining!!
Check the Leasing Company and their T&C's
Last, but most definitely not least, the Leasing Company. It is really important that you think about this, they are not all the same. If you are going through a broker, ask which Lease Co the deal is through and do your research. They are (almost) all part of the BVRLA (British Vehicle Rental and Leasing Association) and therefore subject to a code of conduct and guidance around fair wear and tear charges. They are also covered by the FCA (Financial Conduct Authority) which regulates their activity, so there are a lot of rules for them to obey, with stiff penalties if they step out of line. That said, they all have different contracts and terms and conditions and often different processes around end of contract. This includes end of lease communications, fair wear and tear, damage (Dents, Scratches, Chips, scuffed alloys, chipped or cracked windscreens etc.) There are also penalties for missed services, overdue MOT's, missing keys, lost EV charge cables, worn tyres etc. (see point 4). Keep an eye on the Excess Mileage charges, (see point 3). What do the ratings websites say about the leasing company? It's worth taking some assistance in making sure you are not paying for anything you shouldn't be and you don't miss a trick and end up paying the price when you return the vehicle. This why we built wondle (Check it out!)
