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An Introduction to Car Leasing

Picture of a lease agreement

Leasing a car is like renting.

It is the same as leasing or renting anything else, say a house or flat. You would pay an initial deposit (deposit on car leasing is usually 10% of the total cost of the car) then pay affordable monthly payments of a set amount each month. A leasing contract for a car is usually 2-3 years and after this contract the car goes back to the finance company. As with a property rental, if there is any damage to the car, you will need to pay out.

Car leasing is really quite simple. There are several different types of leases, Personal Contract Purchase (PCP) and Personal Contract Hire (PCH). PCP is slightly different to PCH, PCP gives you the option to pay a ‘balloon payment’ at the end of your contract which allows you to purchase the vehicle you have been leasing, or you still have the option to simply hand the car back and walk away. With PCH you will never get the option to purchase the vehicle and will have to hand the car back at the end of the lease. This means that you will need to decide whether it is important to you to have the option to buy the car or not. If you are likely just to hand the car back, you may be better with PCH.

The best way to understand car leasing is to talk to one of our experts at Ultracar so we can help figure out which kind of lease is right for you. We are here to help!