Lease deals - how do they work?

[Woody]

Guys,
Looking at either going back into the company car scheme or going down the lease route after the hassle I've had with buying/running my own car over the last 3 years.

Having never really thought about lease deals until now I'm not quite sure how they work.

Seems that on some you put down a depoist, agree monthy payments over a set period then at the end you either pay the remainder, chop it in, or walk away - is that correct?

How do these things work with servicing, repairs VED and insurance?
What about using for company business?

Don't normally do more than 12k year inc business.

Any help/advice appreciated.

Thanks

Chris

[Vladimir]

1) Rent a car for 2/3 or 4 years.
2) Tell everyone on PH how great your deal was and how silly "buying" is.
3) Worry about mileage and returned condition for 2/3 or 4 years.
4) Repeat step 2) ad infinitum.

[kiethton]

Woody said:

Seems that on some you put down a depoist, agree monthy payments over a set period then at the end you either pay the remainder, chop it in, or walk away - is that correct?

Chris,

What you've described above is a PCP. PCP's are typically marketed towards the public as a more flexible form of leasing as you can request a settlement to sell the car early if you wish/roll value over. They are also typically designed to give you a small amount left at the end to tempt you back into a new car so are often more expensive as you pay for the flexibility.

Leasing is exactly the same as the above but you give the car back at the end - no option to buy usually:

Deposit (3, 6 or 9 months worth of payments +VAT)
x months of payments +VAT
Give car back at the end

Mileage limits and condition of car when returned apply in both cases (PCP condition isn't too important). Leases often include Tax where as PCP doesn't, whilst some leases may include maintenance, PCP doesn't.

Hope this helps but they are very similar offerings but geared to different markets - you can't just hand a lease car back as you break the contract and they will often chase for the remaining payments.

Edited by kiethton on Monday 9th December 15:35

[zeppelin101]

I bought an Aygo recently and was presented with the following options (PCP not lease - similar but no option to settle with a lease):

1) Give it back at no charge at the end of the loan. At this point, mileage and condition are important - exceed your mileage and you will be charged. Car is not in the condition they expect - you will be charged.

2) Pay the GMFV balance at the end and keep the car with nothing left to pay on the finance. Mileage / condition irrelevant.

3) Chop it in against a new car. The GMFV is tailored such that there is an expected depreciation amount on the car + some equity so that you don't necessarily have to put more money into the new deal. Mileage / condition not considered as per 1).

4) Pay GMFV, sell car privately, get most of the deposit back.

I was told that the mileage at the end of the lease and condition are only considered if you hand the car back and don't get another car or pay off the rest of the finance. Otherwise, it is not considered.

[Chipchap]

What you are most likely looking at is a PCP where the monthly rate is determined by :-

• Number of months
• Advance or Deposit paid
• Guaranteed Future value

On these you have 4 options at the end of the initial term:-

• Pay off the GFV in cash and keep or sell the car
• Pay off the GFV using a secondary agreement i.e. new HP
• Hand the car back as long as it meets the return conditiond = is damage free and has not run over the mileage etc
• PX the car assuming against another new one it has equity in it.

Rarely do these deals include any RFL except year 1, rarely do they include any maintenance or servicing or tyres or insurance. Exceptions do exist. For example Renault offer 4 yrs warranty, servicing, AA/roadside etc irrespective of how you fund the car. Peugeot offer some sort of deal for usership that includes everything except fuel.

Generally though these schemes are low cost of entry designed to move new cars and create used stock.

Allan