Personal contract hire (personal leasing)
With a personal contract hire agreement, you effectively rent the car for an agreed period usually two or three years. You pay a deposit followed by fixed monthly repayments. Leasing can be one of the cheapest ways to fund a car, but there is no option to buy at the end of the contract; you simply hand it back to the finance company and walk away.
Lease agreements involve an agreed mileage limit around 10,000 a year and although you dont own the vehicle, you are responsible for its upkeep and will be required to pay for any damage beyond fair wear and tear. Some lease agreements include servicing and maintenance costs, but theyre not always as cost-effective as basic lease deals, so do your homework first.
Choose leasing if
• You dont want to own the car.
• You want to change your car frequently.
• You want to fix the cost of motoring.
• You want to drive a more expensive car than your budget would otherwise allow.
• You dont want to be exposed to the cost of the cars depreciation.
Watch out for
Cars with poor resale values This will increase your monthly repayments.
Early termination penalties Read the small print before you sign.
Agreed annual mileage limits Youll pay a penalty fee for each excess mile you rack up.
Penalties for damage Keep all service records, take photos of minor scuffs and get dents or scratches repaired. Its a good idea to get the car inspected by the AA or RAC, and to have it professionally cleaned