Should you lease your next car?

Published 4 January 2019
in Advice
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Welcome to the car leasing world! 

I’m sure you have a few questions for us! Pike + Bambridge want you to feel comfortable and understand which car leasing contract will suit you best. We’ve looked into a few of the most asked questions our clients have; hopefully it will clear a few things up for you!

 

Should you lease or should you buy?

As industry, expert Professor Colin Tourick writes in his book, ‘Do the Math’, "In order to decide whether to lease or buy your vehicles, you will need to carry out a financial evaluation."  Tourick goes on to look at the use of "discounted cash flow analysis" to determine whether buying or leasing is best in each situation.

Often the first question you should ask yourself when offered a vehicle is, "Does the person providing me this quote have a vested interest in suggesting one type of finance?". If you are in a dealership, the sales person may well have a commission structure that favours one particular type of finance product (often PCP), while an online leasing company typically does not offer purchase as an option.

One thing clients love is the Pike + Bambridge business structure, we’re independent from manufacturers and finance providers so we can honestly advise you on each option, and there is no bias on the advice we give you. If you would like more help in deciding whether buying or leasing is best for you or your business, we'd love to hear from you. 

 

Which contract should you choose?

The most common lease contract is a Personal Contract Hire. This lease is usually available only on brand new cars and will last between 2-4 years. You are generally required to put down an ‘initial payment’ and a set series of ‘monthly payments.’

Depending on your situation and if you don’t think a Personal Contract Hire will suit you, Pike + Bambridge can offer a variety of lease contracts.

If it is important to you that you have the ability to purchase the vehicle at the need of your contract, a PCP might be better suited.

Or, perhaps you want to lease a car through your business. Great! You will still be required to pay an initial payment and a series of monthly payments, but some business customers will be able to claim VAT back on their agreement.

 

What about contract length and mileage? 

When you lease, you are able to control your cost based on the length and mileage you will use.

This will have to be established at the beginning of your lease, it's important to think about what you need both now and for the future. You need to feel confident that you can see out the contract length, as there are early termination fees if you pull out.

In terms of mileage, you will be asked to set a limit for the duration of the contract and will be expected to stick within that. If you do go over the limit, then there will be excess mileage fees stipulated by the finance provider.

However, this sounds scarier than it is. Normally these costs can be small and with some finance companies, you are able to re-negotiate your mileage during your agreement. Sometimes there are unforeseen changes in life, the benefit of dealing with Pike + Bambridge is that your personal Account Manager is on hand throughout the agreement to advise you on these decisions. It’s not just the car that’s important it’s how this fit into your life and your needs.

 
How much initial payment should I put down?

This is entirely up to you. Depending on your situation, your inital payment can be how much you or the business can afford/want to pay in advance. You have the choice of how much you want to pay up front (3, 6, 12 months) and this adjusts the monthly payment amounts.

It doesn’t matter if your initial payment is smaller or larger, as you will pay the same amount across the course of the agreement. It’s up to you to decide whether you pay more up front, and less per month, or spread the cost more evenly and pay less up front and a higher monthly payment.

 

Are there extra charges for the lease?

Pike + Bambridge will supply you a leasing contract that includes road tax for the full term. We will not charge you any hidden admin/delivery fees. New cars do not require a MOT test until they are three years old, so you will not need to worry about having your car tested unless your lease agreement is longer than three years. 

 

Warranties and Maintenance

Most manufacturers will come with a 3-year warranty, just the same as if you had bought the car outright. Therefore, most of our clients will be covered under warranty for the full agreement (unless you have taken a 48-month lease). We hope you won’t have to, but if you need to get any non-consumable parts fixed on your vehicle within the first three years, you’ll be able to at your local manufacturer approved dealership without paying a penny.

You will also be given the option to add Maintenance, we often get asked whether you should or shouldn’t. Again, it is totally up to you. For a contract where you the ‘Customer’ maintains the vehicle, you take on the responsibilities and need to ensure the vehicle is serviced and maintained at an authorised maintenance centre.

If you were to add ‘Maintenance’ to your contract, this means that during the duration of your lease anything from the vehicles tyres, brakes, exhausts etc. which might need to be repaired or replaced it will be. You also get breakdown cover included, therefore it can be requested if you see yourself stranded and need roadside assistance. Maintenance also includes servicing and MOT’s. To add Maintenance there, of course, is an additional cost, this will depend on the vehicle, the type of contract and mileage you have chosen. Maintenance will not cover any repairs or replacements which are a result of accidental damage.

Again, it is best to have a discussion with your Pike + Bambridge Account Manager as they can look at and advise you on all options to suit.

 

Should I add GAP Insurance? 

Car insurance isn’t included as part of your lease, so you need to obtain fully comprehensive insurance. An additional option is GAP insurance, which covers the difference between a motor cover payout and the cost of replacing the car like-for-like if your car is stolen or written off.  It’s also worth considering protect insurance, which can cover you for scratches, dings, dents and bumper scuffs.  Read the small print carefully of any policy you choose.

 

Will I own the vehicle?

The finance company will own the vehicle, not yourself or Pike + Bambridge. At the end of the contract when you hand the vehicle back, fair wear and tear is expected. Again, we have handy guides that we can give you which explains this and we can assist you in the handback of your lease vehicle by advising you what is worth fixing, and what is not.

 

Our Pike + Bambridge Account Managers are experts and are here to advise you, and your individual situation is important to us. If you are still confused and need any clarification one of the team will be delighted to chat to you.