If you’re looking for ways to save money and still have a brand new car, then Business or Personal Contract Hire (known commonly as Leasing) can be your most cost effective and cheapest option.
It often allows customers to have a brand new car for a small monthly payment and small deposit Vs traditional financing such as PCP (Personal Contract Purchase) or HP (Hire Purchase).
Contract Hire also allows customers to avoid the depreciation of purchasing a brand new with cash as frequently brand new cars driven away from a Dealership can lose £1,000s in the first few months of ownership.
There are many different funders in the UK – some independent e.g. Lex Autolease, Arval, BNP Paribas and others linked to Vehicle Manufacturers e.g. Free2 Move Lease (Peugeot/Citroen/DS), VWFS (Skoda, Seat), RCi Finance (Nissan), Leasys (Fiat & Abarth).
If you are looking to lease a car in the UK, then what questions should you be asking? Please find out top 21 questions to ask when leasing a car in the UK below.
How Long is the contract for?
Most Personal or Business Contract Hire agreements are for a period of between 1 to 5 years. They are often expressed as the initial payment plus the number of months remaining e.g. 1+35, 3+35, 6+35, 9+35 etc. The higher the figure as the initial payment, then the more money is paid in the initial payment. An example would be a 3+35 contract at £250+VAT per month would mean an initial payment of £750+VAT. Usually the longer the contract length and higher the initial rental; then the lower the monthly price. However, there is always a “sweet spot” for most offers where adding any more upfront would have little a very on the monthly payment and would be “dead money”.
Is it a Business Or Personal Contract Offer?
Some funders will only allow Business users to contract hire vehicles, but most allow both Personal and Business Contract Hire contracts opening up a wide variety of vehicles – both cars and vans whether being used for Business or pleasure. In addition, Business Contract Hire adverts will be excluding VAT, which at 20% can have quite a difference on the real cost of the vehicle per month, but also overall. Should you be looking for Business Contract Hire then ensure you understand the implications on what VAT you can claim back – if you’re not sure then feel free to contact us. If you’re looking for Personal Contact Hire then please ensure that the offer prices include VAT and state that you need Personal Contract Hire if emailing / talking to any leasing providers.
How Does The Yearly Mileage Affect the Monthly Cost?
Mileage is a very personal thing and should be worked out as accurately as possible in order to avoid unexpected costs at the end of a Contract. However, if you know that you do 10.5k miles per annum, choose a 3 year term then you could be better off going for a 10k miles per annum contract and paying the excess mileage which could be around 8p. This would give a total excess mileage charge of £120, whereas adding that 500 miles per annum into the contract could be at least another £2 or £3 per month increase. Equally if you know you are going to do 20k miles per annum, don’t just go for a 10k miles per annum contract as it would cost you an extra £2,400 at the end of the contract. Most funders will allow you to adjust mileage upwards when part way through the contract term, but every funder has their only policy regarding this and it is worth asking if they can offer an adjustment mid term.
What are the Excess Mileage Costs?
As per the question above, you need to find out this information in order to maximise your cost effectiveness with balancing your actual mileage Vs the lowest possible on the contract without costing too much at the end of the contract. Most funders will charge anywhere from 3p per mile right up to 20p per mile depending on type of car / vehicle, length of contract or if servicing / maintenance / tyres are included. Make sure you get this figure in writing via an official quote showing the funders’ details.
Is Servicing and Maintenance Included?
With most funders it’s possible to include servicing and maintenance, with some funders also offering replacement of worn tyres as well. This could give you a fixed cost per month, with just fuel and insurance left to pay for. Many customers find this to be the best option in terms of leasing as it helps them to budget better – this is true for both Business and Personal Contract Hire customers.Quite a few funders will be able to give a with or without maintenance cost.
Are Tyres Included?
Depending on the type of vehicle you’re leasing, replacement tyres can prove very expensive. It often works out cheaper (varies based on mileage / contract length) by including replacement of worn tyres within the contract and makes it easier to budget your car expenses.Most funders will offer replacement of worn tyres and the usual agreed replacement depth is 2mm. Tyres can either then be changed by a main Dealer or at one of the large independent tyre fitters such as ATS.
How much is the Deposit?
With Business or Personal Contract Hire there is no deposit, just an initial rental. The word deposit gives the impression that the payment may be returned, but with a contract hire agreement; this is not possible. The initial rental can be as little as 1 month upfront (e.g. 1+23 term) or as much as 12 payments upfront (e.g. 12+23). Don’t forget the initial rental is there to lower the monthly payment and is effectively “dead money” and should be factored into looking at the WLC or Whole Life Cost of the Vehicle / Agreement.
What happens at the end of the lease?
At the end of a Contract Hire agreement, the vehicle is usually inspected (often by a 3rd party such as Mannheim Inspections) and returned to the finance company. At the inspection the condition of the car is reviewed – both inside and out. Any damage deemed to be over and above Fair Wear and Tear (see definition and advice on the BVRLA web site by clicking here). The service record is checked and if due a current MOT should be with the vehicle as well. Tyre tread depth, unusual tyre wear and also trim items are inspected. With certain funders, you may also be able to get a price to purchase the vehicle at the end of the contract when there are approximately 90 days left to run. This is not always the case so would be worth checking with the leasing provider you are talking to.
Is Road Fund Licence / Vehicle Tax Included?
With most funders the Road Fund Licence / Vehicle Tax is included in the contract for the whole term. It is very rare for it not be, but worth checking when obtaining quotes that this cost is included. How will the vehicle be delivered?Most vehicles will be offered with driven delivery, but it is possible to request the vehicle to be delivered on a trailer. Going direct to a dealership could offer you the option of collection, which means you can get a full handover and ensure you understand the controls of the vehicle before driving off. This is something that can be arranged at ArburyFleet.co.uk as we have a number of dealerships across the West Midlands. It is to be noted that some funders will allow a starting mileage so that delivery miles will not be included in the contract so driven delivery will not affect your mileage allowance.
Is there an Admin Fee?
Most leasing providers – either broker or main dealer will charge an Admin. This can be anything from a very reasonable £49+VAT right up to £500+VAT has been known for larger brokers / prestige vehicles. The admin cost should be factored in to your WLC – Whole Life Cost calculations.
How Much Am I Actually Paying?
Finding out how much the WLC or Whole Life Cost of the contract is most important. For example a contract with a term of 3+35, 12k miles per annum costing £300+VAT per month would be a total cost of £11,400+VAT or £13,680 inc VAT in total. You’d then have the cost of 2 x services (average of £350+VAT per service), potentially a set of tyres (roughly £400+VAT for set), which would push the WLC up to £12,500+VAT or £15,000 inc VAT. Of course, if you go for the included service, maintenance and tyres option it makes this calculation a lot easier. When will my payments come out?
This initially depends on the delivery date of the vehicle, as it’s usually 1 month after delivery for the first payment. However, it is very easy to call the funder after delivery / collection to change the date to one that suits you. You would usually need to cover the initial rental prior to delivery of the vehicle. What if my circumstances change and I need to end the Agreement?A Contract Hire Agreement is a contract for a vehicle for a set period of time. Both parties (customer and funder) would need to agree any changes before the contract can be varied. Most funders are very amenable and would allow the early end to a contract, but would charge a cancellation fee to cover any losses / costs. Depending on circumstances and how long is left, it usually works out to around 50% of the remaining rentals owed.
What Do I do about Insurance?
Insurance is not usually included in the contract so you’ll need to get this covered yourself. It’s important to let the insurance company know that the vehicle is a Lease car and that you will not be the registered keeper. This is not an issue for most insurers and as with all insurance it pays to shop around or use an insurance broker to do this for you. Insuring a lease car should not cost any more than insuring the same car, if you owned it yourself.
Do I have to get the vehicle Serviced?
Short answer is YES! The vehicle should be serviced in line with the manufacturer’s guidelines – found either in the service guide / book within the vehicle or you should call the supplier of the car to find out. All funders require the full service schedule to be completed before the car goes back and that the servicing has been carried out by a Main Franchised Dealer. There are no exceptions to not having the vehicle serviced at a Main Dealer as per the guidelines and the funder will make a charge at the end of the contract (anything from £300 upwards per missed service). It’s therefore really important that the servicing guidelines are followed correctly. Do I need to get an MOT for the vehicle?
If your contract is for anything less than 36 months in length, then no. However, if it is 36 months or more, then the vehicle will require having an MOT carried out, prior to the vehicle being returned or earlier if a 48 – 60 month contracting. This is true, even if you hand your vehicle back on a 36 month contract with the MOT being due after the car goes back. Most funders will require a valid MOT running for at least 2 months after the car is returned – always worth checking the contract terms and conditions to ensure you don’t get caught out.
Can I make Modifications to the Car?
Not without contacting the funder first! Any modifications would need to be agreed by them and it almost goes without saying that you should inform your insurance company too. Simple additions such a tow bar may end up being very costly if not discussed prior to fitment. It may be better if you know that you require such items to discuss these at initial enquiry stage so that a proper factory / Main Dealer fitted item can be added. This ensures 100% compatibility of the part and no hassle on return of the vehicle.
Can I part Exchange My Current Car?
Yes with ArburyFleet.co.uk we are backed by Arbury Motor Group and have the facility to offer a part exchange against any of our leasing deals. We’d just need to know registration number, current mileage, any damage and some pictures of the car would be great. Always happy to have these via email – firstname.lastname@example.org Can I Lease a Used Car?There are a growing number of funders offering this option, but is it really a cost effective option? A used car will have been driven by someone else, not have a full warranty and have a lower residual value resulting in a higher monthly price. With so many brand new cars with great lease deals, it’s not something that is very popular.
Should I Lease from a Dealership or an Online Broker?
The biggest decision to make when leasing a car is feeling that you can trust the person and company you are obtaining the vehicle from. A vehicle broker acts as a middleman between you, the funder and the supplying Dealer. The benefit of this is that the broker will usually have access to different brands and different funders to help you shop around for the best deal. Buying from a Dealership allows you to work with someone who knows the brand / vehicle inside & out, can liaise with a manufacturer owned funder, and the Dealer will have a direct line into the manufacturer. They will also understand the manufacturer’s processes and enable you to avoid the “information lost in translation” that is inherent with using a broker. What if you could have the best of both worlds? That’s where ArburyFleet.co.uk come in; as we work across the whole Arbury Group of brands and manufacturer backed funders – Peugeot, Citroen, Fiat, Abarth, Seat, Skoda and Nissan are all available. Our leasing experts know the vehicles and the options available – saving you time and hassle when selecting a lease vehicle.
If you're still unsure who to trust, then please visit our testimonials page or use the box below and we'll call you back.
* All vehicle images and car descriptions on this site are for illustration and reference purposes only and are not necessarily an accurate representation of the vehicle on offer.
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