{"id":3021,"date":"2020-09-09T00:00:00","date_gmt":"2020-09-08T23:00:00","guid":{"rendered":"http:\/\/dev.c2b-blog.builtbybrave.com\/new-model-releases\/how-does-car-leasing-work-a-beginner39s-guide_999126130\/"},"modified":"2024-11-21T11:34:07","modified_gmt":"2024-11-21T11:34:07","slug":"how-does-car-leasing-work-beginner-guide","status":"publish","type":"post","link":"https:\/\/www.cars2buy.co.uk\/news\/guides\/how-does-car-leasing-work-beginner-guide\/","title":{"rendered":"How Does Car Leasing Work? A Beginner's Guide"},"content":{"rendered":"

Never leased a car before? Understanding how the process works can be a little confusing and, often, the information out there on the internet just throws buzzwords at you, expecting you to just know what they mean. We understand how annoying and frustrating that can be, which is why we have put together this beginner\u2019s guide to car leasing.\u00a0<\/span><\/p>\n

By reading this, you\u2019ll be able to get your head around the basics of how car leasing works, so that you can at least feel more comfortable when looking through the various <\/span>car lease deals<\/span><\/a> available.<\/span><\/p>\n

If you feel ready to learn more about each aspect of car leasing after reading this, we also have a selection of in-depth <\/span>car leasing guides <\/span>to help you get your head around it all even more. For now though, let\u2019s start with the basics.<\/span><\/p>\n

What Is Leasing?<\/span><\/h2>\n

When you want to learn about how car leasing works, the first step is to understand what car leasing actually is. As we said earlier, a lot of the information out there assumes that you have a basic understanding of car leases – so if you don\u2019t really understand how car leasing works or what it actually is, it can be a confusing topic to get your head around.<\/span><\/p>\n

In simple terms, car leasing is the long-term rental of a car. Instead of renting a car for a week or two while you\u2019re holidaying abroad, the rental period for a car lease contract is usually between two and five years. The individual payments are also much smaller than they would be for a short-term rental.<\/span><\/p>\n

How Does Car Leasing Work?<\/span><\/h2>\n

You get to drive the car for the length of your lease, as long as you keep up the payments, but you won\u2019t have to worry about things like the value of the car decreasing because you give the car back at the end of the lease.<\/span><\/p>\n

Similar to a house rental, you have to pay an initial deposit for the lease. Then, at the end of the lease period, if there\u2019s any damage you\u2019ll need to cover the cost of fixing it.<\/span><\/p>\n

Now we\u2019ve got the basics covered, let\u2019s look at the different types of car leasing and how they work in more detail.<\/span><\/p>\n

What\u2019s The Difference Between Personal & Business Car Leasing?<\/span><\/h2>\n

To begin with, there are two main types of car leasing: personal and business. Personal car leasing is exactly what it sounds like: a lease deal that you take out yourself, where you cover the costs. The lease is tied to you specifically.<\/span><\/p>\n

On the other hand, business car leasing<\/a> refers to car leases that are done through a company for its employees. The business takes on the lease and the cars are driven by those who work for the company.\u00a0<\/span><\/p>\n

How to Lease a Car Yourself<\/span><\/h2>\n

Personal car leasing is more commonly known as PCH (Personal Contract Hire). As the individual who will be taking on the lease, you will need to personally cover the deposit cost and will be responsible for the car whilst you are leasing it.<\/span><\/p>\n

As mentioned previously, you will need to put down an initial deposit that is typically the equivalent of three to six months of payments. Then, you will have to look after the car as you use it for the period of the contract. At the end of that contract, you\u2019ll return the car to the finance company, at which point you can choose to get a new lease deal. We will cover what happens at the end of the lease period in more detail later.<\/span><\/p>\n

What Is The Difference Between PCP and PCH?<\/span><\/h3>\n

Another acronym that you\u2019ll likely see when looking at car leasing is PCP. This stands for Personal Contract Purchase, and it has specific fundamental differences to PCH.<\/span><\/p>\n

With a PCH deal, you pay each month and then give the car back, not having to worry about the value of the car degrading. However, with PCP, you actually end up owning the car at the end. This is done through a lump sum payment in the very last month, which is usually a large amount of money that you need to prepare for.<\/span><\/p>\n

From there, the car is then yours, but it is important to note that the value of the car will be considerably less than when you first got into it. Therefore, it\u2019s typically less risky financially to use PCH and return the car at the end, before getting another new car shortly thereafter.<\/span><\/p>\n

What Restrictions Are There On Personal Car Leasing?<\/span><\/h3>\n