Cheap leasing schemes to hit UK

American-style car leasing schemes are set to hit the UK, promising cars at greatly reduced prices.

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American-style car leasing schemes are set to hit the UK, promising cars at greatly reduced prices.

Reg Vardy, the UK’s second biggest car dealer group, will operate the first scheme of this type, which is expected to be launched by the end of the year.

Under the scheme, customers would lease a car for 12 months then take out a new plan for another car. The dealer would pay the road tax and any servicing work should be covered by the manufacturer’s warranty.

‘The benefit of this scheme is cheap motoring with no need for a deposit and the chance to change cars frequently,’ a spokesman for Reg Vardy said.

While the company has yet to confirm prices, it hints that lease schemes could cost from £99 a month. The spokesman said: ‘Our pilot scheme has generated a lot of interest, and for the scheme to work it will have to be priced competitively.’

According to Reg Vardy, several of the UK’s biggest dealer groups are also looking into a similar scheme.

Even if the scheme offers low monthly payments, car buyers shouldn’t assume it will be cheaper than conventional finance in the long-run. Unlike a Hire Purchase or Personal Contract Purchase scheme, the customer does not own the car at the end of the agreement, so the monthly payments will need to be significantly lower than conventional finance if leasing is to make financial sense.