New car sales have been on the rise in recent years, but is this really the best option for you? A lot of this demand comes from private buyers instead of firms and buying a new car can help improve the wider economy, however, when it comes to your personal finances, car leasing may be the better option. Personal leasing is when you rent a car for a set number of years and then you give it back to the company that you rented it from. This was established in the United States of America and more and more people here in the UK are adopting it too.
Here we are taking you through the basics of car leasing so you know which option you should go for.
Watch Out for the Depreciation When Car Leasing
Essentially, when you are leasing a car, your monthly payments will cover the cost for the lease operator of the car’s fall in value over the time period that you are renting. Plus, of course, you will be paying them a profit too. This is why many people are surprised by how cheap it is to lease a car compared to buying one. This is particularly true for very upmarket cars such as Mercedes-Benz which many people would otherwise not be able to afford. There are many factors that will affect the depreciation of the car including tax and fuel efficiency as when these increase, the cars will depreciate faster. Car leasing companies will base the monthly cost around how much they think the car will be at the end of the renting period and so normally you will also have to adhere to very strict mileage conditions as heavy mileage will depreciate a car much faster. Lease terms are anywhere normally from 24 months to 36 months.co
How Does It Compare to Buying?
When you are looking to find a car leasing deal, you will normally have to put down an initial payment as this is normally a multiplier of the monthly rent. However, the bigger the initial down payment you can make, the more you can reduce the subsequent monthly car leasing payments. The first thing to do is decide what car it is that you want to have, You can then work out what your initial payment would be, what multiplier this is of the monthly payment and remember to add on the arrangement fee! You can then factor in your mileage with what you are allowed to do per year and then work out how much this would cost you over say, a period of 24 months. Is it worth it? Compare this price to what it would cost you to buy the car outright and you will tend to always find that car leasing works out at a much better deal for your wallet!
Find a fantastic car leasing special offer and drive off with your brand new car in just a few short days!