When you’re in need of a brand new motor, it can sometimes feel like there are a million different roads to take, along with all the different ways you can pay for it. For some drivers, leasing or buying is purely a matter of price. For others, their car is more than just something they use to get from point A to point B. Choosing whether to lease a new vehicle instead of buying it can depend on which lane you fall into.
The cost of purchasing a new car can often require a lump sum of cash that you have to be willing to part with. Not only that, if and when you plan to trade-in your car is an important consideration too.
We are going to walk (or drive) you through why car leasing is making more and more sense.
What is the difference between PCP and Leasing?
Let’s get down to basics…what is the difference between the two?
Personal contract purchasing (PCP) and car leasing both give the driver the opportunity to drive off in a new car without paying for it outright. A PCP plan is a type of loan, but you are only able to borrow an amount equal to the difference between the car’s value and its expected value when the agreement terminates and you will most likely have to put down a deposit. Normally, the bigger the deposit then the smaller the monthly payments will be.
Leasing works a little differently. When you lease a car it means that you rent your vehicle for a fixed length of time then at the end of the contract, you return it. You will still need to pay an upfront deposit and then a series of monthly payments but the general rule of thumb is the longer the agreement, the lower the monthly payments. So, what’s the bonus to leasing? You will not have to pay interest! The monthly instalments are agreed at the start of the agreement and remain fixed throughout the duration of the lease period.
What are the lease approval requirements?
1. To pass a UK car lease credit check, your credit score will most likely have to be excellent. If you have poor credit, you may have to look into a co-signer.
“Dealerships that lease cars are essentially letting customers use their vehicles unsupervised for a number of years with little or no down payment. Because of this risk, leasing rules are often more stringent than rules governing traditional car loans.”
(Source: https://pocketsense.com/requirements-for-leasing-a-car-12479264.html)
2. A Driver’s License and Insurance is crucial. It may sound obvious but your driver’s license must be valid and you will have to be fully-coverage by your insurance if you plan to lease a car.
3. Your age and income could affect the chance of your lease application being accepted. For example, a 35 year old adult ]earning £35,000 per year is more likely to be accepted than a 21 year old earning £20,000 per year. Don’t let this discourage you though as there are a number of variables that are taken into consideration and there are tools that allow you see if you can be pre-approved before applying!
There are many advantages to leasing. Whether you’re wanting to bring down your monthly payments, need a car that is still covered by the manufacturer’s warranty period or you just like the idea of having a new car every few years. To hear more about your cars2buy’s leasing comparison service or to view the makes and models available, contact the team today!