How Does Leasing A Car Work?
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How Does Leasing A Car Work?

How Does Leasing A Car Work?
Posted in Insider News On By David Moffatt

Have you ever wondered how does leasing a car work? Leasing is becoming more popular, but how does it work? Get the complete guide to leasing a car here...

So, everybody seems to be talking about car leasing right now.  I'm sure at least three people have told you to lease your next car!  In fact leasing a new car or van is more popular than ever, and I've been involved in car leasing since 2003.  But how does leasing a car work for business and/or personal drivers?

How Does Leasing A Car Work?

I'll try to breakdown the process of leasing a car or van in three stages, which will showcase how simple this form of driving a new vehicle really is!

Start Of The Contract

At the start of the contract you have to pay an initial rental, this can be a set amount i.e. £500, or multiplies of the monthly rental.  This is normally 3x or 6x, for example - if the monthly payment is £100 and the initial rental was guessed it - the initial rental would be £300! Next you set the contract term, basically the period of time you want to take the vehicle over.  This is normally taken over two, three or four years. Lastly, you will need to agree with the finance company what annual mileage the vehicle is expected to do.  In most cases this can be amended during the contract if your circumstances change.  Bear in mind, if the total contracted mileage is exceeded there will be an excess mileage charge to pay.  This is normally set at around 6 pence per mile. [caption id="attachment_581" align="aligncenter" width="500"]How Does Leasing A Car Work How Does Leasing A Car Work[/caption]

Middle Of The Contract

During the term of the contract it's relatively plain sailing.  Don't forget if the vehicle needs to be serviced you must get this done as per the manufacturers guidelines or risk paying a penalty charge when the vehicle is returned. The simple way to put it is just treat the vehicle like it's your own.  If it needs a service - get it serviced.  If the tyre needs replacing - replace the tyre.  You get the picture.

End Of The Contract

This is the easy part, simply hand the vehicle back at the end of the lease agreement!  That's all you need to do. Naturally if the vehicle is damaged beyond "Fair Wear & Tear" there will be additional charges to be paid.  But really, just like I mentioned in the Middle Of The Contract section, treat the vehicle like it's your own.  If someone scrapes a key along the side of the vehicle and you owned it, chances are you'd get it fixed - so why wouldn't you do it with a lease car? On a serious note, all of the major finance companies adhere to the British Vehicle Rental And Leasing Association's (BVRLA) Fair Wear & Tear guide.  This means that only genuine damage is charged, i.e. light scratches, stone chips, small scuffs to the wheels are all deemed to be acceptable. As long as you can accept the fact you never own vehicle, simply hire it from the finance company - welcome to the world of cheap motoring! There are different types of contracts available to business and personal users.  The above is an overview to the question "how does leasing a car work", if you want a more detailed explanation for the different types of business and personal leasing contracts take a look at the links below: Personal Contract Hire Personal Contract Purchase Business Contract Hire As always, I hope you have found this article helpful?  Please take a minute to leave a comment or share the article using the social sharing buttons below.  If you have any questions regarding car or van leasing please email me on and I’ll get right back to you.  You never know, it could be the title for my next blog post! If you have any questions or just want some straight talking advice please feel free to call our team on 0151 728 4711 or visit Stable Vehicle Contracts. If you are considering changing your lease car or van in the near future why not join the thousands of subscribers who already receive our weekly newsletter.  Each week we aim to send out a selection of the very best contract hire & leasing offers in the UK!