Car Leasing FAQ
Below you’ll find some of the most frequently asked questions we receive about car leasing, contract hire, and related issues.
- What is a personal contract hire agreement?
- What is the difference between contract hire and personal contract purchase (PCP)?
- Is it a good idea to lease a new car?
- Is insurance included in a car lease deal?
- Can you get car insurance if you’re not the registered owner?
- Can you lease a second car?
- Is road tax included in a car lease?
- Is servicing included in a car lease?
- What does it mean by customer initial rental?
- Is there a mileage limit on a car lease?
- Can I amend the agreed mileage part-way through a contract?
- Can I lease a car if I have bad credit?
- What if the car gets damaged during the lease?
- What happens if my lease car is written off?
- What lengths of contract are available?
- Can I put a personal number plate on the car?
What is a personal contract hire agreement?
A personal contract hire (PCH) agreement involves you signing a contract to lease a car for a fixed period of time at an agreed monthly cost. For private leasing (for individuals) that means cost-effective and flexible motoring which often works out as being cheaper than other forms of finance such as personal contract purchase and hire purchase.
What is the difference between contract hire and personal contract purchase (PCP)?
With both contract hire agreements and PCP deals, the finance company owns the vehicle throughout the lease. As the name suggests, the lessee is merely hiring the car for a contracted length of time. At the end of the lease, the vehicle is handed back to the finance company, whereas those taking out personal contract purchase (PCP) deals will have the option of buying the car outright at the end of the lease. For more information visit our private car leasing guide here.
Is it a good idea to lease a new car?
As oil baron JP Getty once stated: “If it appreciates, buy it. If it depreciates, lease it.”
With this in mind, it helps to realise that cars are historically one of the fastest depreciating commodities you can own, with huge amounts disappearing off its value the moment you drive it away from a dealership and even more being obliterated one year into ownership.
Leasing helps negate this, with your fixed monthly cost essentially ‘paying off’ any depreciation on the car. The more residual value a car keeps, the cheaper it is to lease which is why you can often find some amazing lease deals on luxury manufacturers and why it often works out cheaper to lease.
Is insurance included in a car lease deal?
No. Because the cost of insurance can vary wildly between drivers, it is impossible to accurately factor in insurance costs with our monthly lease rates. Luckily though, insuring a lease car is no different to getting any other car insured, so shop around for the most suitable quote for you.
Can you get car insurance if you’re not the registered owner?
This is essentially how insuring a lease car works. When you are looking for a car insurance quote on a lease car one question from the car insurer will ask if you are the registered keeper and legal owner. At this point you would click ‘no’ and fill in further details about the company you are leasing from.
Can you lease a second car?
You can lease as many cars as you can afford! Please be aware that this might severely impact your credit rating and ensure that you can afford the monthly repayments on leasing more than one car before enquiring.
Is road tax included in a car lease?
Road tax, or Vehicle Excise Duty, to give it its proper name will normally be included within the price. All lease agreements should include road tax either for the duration of the contract or for the first 12 months. Please note, if the cost of the tax increases during the lease agreement, you may be liable to pay the amount of the increase. Always check your contract.
Is servicing included in a car lease?
You can choose deals with servicing included, although not all lease companies will offer this.
If the deal does come with maintenance, the lease company will pay for all servicing and scheduled maintenance, but some consumables such as tyres and windscreen wipers may not be included.
If the deal does not have maintenance included you will have to pay for servicing. The terms and conditions of the lease may stipulate that this is done at a franchised dealer or manufacturer-approved service centre. As the car is likely to be under warranty for the duration of the lease, any faults will be repaired under warranty and you may be able to purchase a servicing package.
What does initial rental mean?
This means how many months upfront you can pay as ‘deposit’ on your choice of car lease. So if you were looking at leasing a car for £199.99 per month and the deal states that the initial rental/deposit is six months you would pay £1,199.94 upfront outside of any additional fees.
Is there a mileage limit on a car lease?
Yes. All the deals advertised on ContractHireAndLeasing.com have a mileage limit, and there will be an excess mileage charge for exceeding this. It is therefore important that you are realistic about the number of miles the vehicle will cover when you take out the lease. Choosing wisely will save irritating and potentially expensive surcharges.
Can I amend the agreed mileage part-way through a contract?
This should not be a problem. You will need to contact the leasing company concerned to arrange an alternative agreement, but this will usually mean altering the monthly payments.
Can I lease a car if I have bad credit?
As responsible lenders, FCA-regulated companies and signatories to the ContractHireAndLeasing.com Code of Conduct, our advertisers have to perform a credit check before completing a lease agreement.
This is necessary to protect both you and the leasing company.
We can’t comment on individual cases, but those with poor credit may find it harder to be accepted. If you are unsure, the best course of action would be to find a deal you like, call the advertiser and explain the situation.
What if the car gets damaged during the lease?
Minor damage such as lightly scuffed alloys and stone chips are unlikely to be an issue under the “fair wear and tear” clause found in lease contracts. A guideline description of fair wear and tear can be found here. More severe damage will need to be fixed by an approved repair centre.
What happens if my lease car is written off?
What normally happens is the insurance company will negotiate directly with the leasing company. Different companies have varying policies. We recommend that you check with the company concerned. You may want to consider Early Termination insurance or G.A.P insurance to cover you for any costs.
What lengths of contract are available?
The minimum term for a contract hire agreement is 12 months, with deals on ContractHireAndLeasing.com stretching to as long as 60 months (five years).
Can I put a personal number plate on the car?
Yes, this shouldn’t be a problem, just check with finance company providing the vehicle first. Make sure that you have their agreement and confirmation that they will transfer the number back to you at the end of the agreement.