Car leasing is often not fully understood, even sometimes completely misunderstood.
Leasing a car is nothing more than a method of paying for the use of a car or van over a specified period of time. Sounds like daily rental, but don't get the too confused because they are very different. While you can hire a car for as little as a day, or even a few hours, leasing typically starts at 24 months and doesn't provide for easy termination or vehicle swapping.
Leasing a car is a form of vehicle financing; hiring is not. Car lease is not the same as property leasing. Leasing is not a dealer scam. It is a long-time well-respected form of business financing for motor vehicles, construction equipment and buildings. However, business car leasing for general consumers only became popular in the 1980s as people began to look for more affordable ways to acquire the new cars they wanted.
When you car lease, you can negotiate a purchase price with the broker just as you would if you were buying. This key point is not well known and brokers have even told customers that, because it's a lease, lease price is always full retail price. This is simply not true. Generally, the only time you would not need to negotiate price is when a broker is offering a special manufacturer-discounted deal in which the price and other factors of the lease are already set to attract your business.
If you don't like negotiating, get already-heavily discounted rentals from Leaseline The Vehicle Leasing Specialists Ltd. A car leasing broker who has access to pretty much all of the Uk manufacturer's deals and top car leasing funder's special offers.
We get the heavily discounted prices from the manufacturers for our commitment to volume and pass this on to you.
Once you've signed the lease contract, the dealer actually sells the car to the leasing company at the agreed price. The leasing company then leases the car to you, based on that price. For that reason, price becomes the most important factor in what you'll pay in monthly lease payments.
A broker simply acts as an agent for the lease company so you don't deal directly with the leasing company until you start to make monthly payments.
The broker works out the terms of the leasing agreement with you on behalf of the car lease company. For this service, the leasing company usually pays him a commission. Once the contract is approved and signed, your relationship is with the leasing company, not the broker, but we enter into an agent agreement with the leasing company and will assist you in many issues you may have thoughout the contract term.
Leasing companies used by brokers can be subsidiaries of the car manufacturer (called "captive" leasing companies), such as Business Partner for Ford or VW Financial Services for Volkswagen. However, brokers can also offer leases from large banks and other lending institutions with whom they've worked out business relationships.
Many years ago it was possible for consumers to bypass brokers and independently arrange car leases with banks and leasing companies. Since the financial "crash" of 2008-2009, it has become almost impossible to do so. Nearly all leases are arranged through car leasing brokers.
You decide on the car you want and negotiate your best price with your broker (or get a pre-arranged price or special lease deal). The broker will calculate your monthly payment based on the negotiated price and other non-negotiable factors, such as finance rate, that are provided by the lease company. You may lower your monthly payment by making a larger first payment if you choose. Your payment will also be subject to VAT.
At the time you sign your car lease contract, you will be required to pay your first month's payment, as well as any VAT.
Some leases may require an up-front security deposit that goes towards your first payment if the vehicle has to be ordered.
Signing a car lease contract means that you agree to make regular monthly payments, maintain your vehicle, keep appropriate car insurance, pay any and take good care of the vehicle speeding or parking fines. Further, you agree that you'll keep the car for a specified number of months — typically 24, 36, or 48 months — and you're expected to keep the car to the end of the contract term.
Just to be clear, when you lease a car you are responsible for all maintenance, service, insurance, just as if you owned the car. unless you take a car lease including these optional items. Remember, leasing is not just hiring.
At the end of a lease you're expected to return your vehicle to the car leasing company with no more than normal wear and tear. You'll have to pay for any damage or extra mileage over and above your contract-specified limits.
Our industry has a fair wear and tear guide produced by the BVRLA
You may have an option to purchase your vehicle at lease-end for usually a price between trade and retail, if you choose.
Otherwise, you can simply return the vehicle to the leasing company and walk away.
Making the best decision about what to do with your vehicle at lease-end — returning it to the leasing company, buying it, or extending your lease — requires that you look at each option carefully and evaluate.
For anyone thinking about leasing a car, it's very important to understand what leasing is — and what it is not — and how it works and if you have any questions no matter how small just give us a call.