
Cheap Car Leasing
Find the cheapest long-term car rentals
A brand new car is never MoneySaving, but if your heart is set on one and are comfortable renting it for a set period, then car leasing – also known as personal contract hire (PCH) – is worth considering. Here we've broken down the basics so you can work out whether leasing is right for you.
Not the car finance option you were looking for? Check these out...
Personal car loan | Hire purchase (HP) | Personal Contract Purchase (PCP)

What is car leasing?
Leasing a car is no different to leasing – or renting – anything else. If you rent a house or flat, you pay a deposit, then you get the use of it for an agreed period during which you pay a set amount each month. Once the contract ends, the property reverts back to the landlord.
And it's the same with car leasing. After agreeing how many miles you will drive each year, you'll pay a fixed monthly amount, often with a larger initial payment to act as the deposit. Thankfully most deals display this very clearly. For example, a 24 month contract listed as 6+23 would mean the first monthly payment is six times the usual amount (for a £150/mth deal, you'd pay £900 upfront in the first month followed by 23 monthly payments of £150).
You'll never own the car (or get the option to buy it) and at the end of the deal, the car goes back to the finance company. It's inspected and, just like with a property, you'll need to pay out if you've damaged anything (above normal wear and tear). You'll also face extra charges if you've exceeded the agreed annual mileage, usually for every mile you've gone over.
How does leasing work?

You'll usually lease a car from a finance company or sometimes direct from a manufacturer. The deal they offer, and how much you pay, is then based on the make and model you choose, how many miles you will do and how long you will keep the car.
The car remains the property of the finance company throughout, but as brand new cars quickly depreciate in value (accelerated further with time and higher than average mileage), when you hand it back it will be worth much less. Most leasing companies sell on the car when it's returned so the car leasing pricing model works by covering its loss in depreciation (the price it bought the car for minus what it predicts it can sell it for after the agreed term), plus a margin for profit.
Yet as lease companies usually buy multiple cars at a time, they're often able to pay far less for a brand new car than individuals, so the amount of depreciation is usually lower. This can mean leasing deals for certain models can be competitive, offering a cheap way to get behind the wheel of a new car.
How to choose a lease deal
Car leasing contracts typically run for two to four years though you are able to get slightly longer or shorter. It's worth playing around with this as it changes the cost of the deal and there's no set rule for which period is cheaper. You'll also need to determine a mileage limit, though here more miles will almost always return a more costly deal.
You can search hundreds of lease deals online by entering the specific model you're after or by putting in your budget, preferred contract length or type of car you're after, such as SUV or a convertible.
The trick to choosing the best value deal is to work out the total cost that you'll pay over the entire contract, including any upfront admin or processing fee that is sometimes charged. To do this simply multiply the monthly payment by the number of months in the deal, plus the larger deposit. So for the 6+23 £150/mth example detailed earlier, with a £199 processing fee, you'd pay a total of £4,549 over two years.
You can then compare this to other types of finance. Equally if this is higher than the amount you'd expect to lose in depreciation if you were able to buy the car yourself outright and sell it, then it's likely not a great value deal - and vice versa. It's also worth checking how much you'd pay if you exceeded the agreed mileage limit, so you can factor in a safety net.
Quick question

What happens at the end of the lease?
Once your agreed contract term has run out, you'd usually arrange for the car to be collected and returned. However you may be able to extend the lease – it's worth contacting the finance company a few months before the end of the deal to check it will allow this, and whether it'll offer a discount on the monthly payment as it's now an older car.
At the point of returning the car, the finance company will arrange a time for it to collected and inspected. Providing it's in good condition with no damage (aside from normal wear and tear) and within the agreed mileage, then there'll be nothing else to pay.
If there's damage then you'll receive a bill to cover the repair charges. Once the car has been returned you no longer have any option to get other quotes, so it's worth getting any major damage repaired before the inspection, enabling you to shop around for the repair costs.
Similarly if you've gone over the mileage limit, then you'll need to pay a charge, which is usually around 10p per mile, though always check how much this is before taking out the lease.
Is leasing the right option for me?
Here are the big advantages and disadvantages of leasing, to help you work out if leasing is for you. Make sure you can live with the disadvantages. If you can't, then it's likely that leasing isn't for you, and you might want to look at the other finance options.
Pros
Often the lowest upfront & monthly costs for a brand new car (especially upmarket models).
Cover from the manufacturer's warranty for the term of the deal.
Road tax and breakdown cover included – sometimes, servicing too.
No worries about how much value your car will lose over the term – it's not your problem.
Simple. You pay monthly then hand your car back to the finance company at the end of the contract.
Cons
You won't own the car – you're just the driver for the term of the deal.
Monthly payments may be low, but you don't get the cash when the car's finally sold.
Limited mileage. Drive over the limit, and you'll pay for it. Excess mileage charges are usually around 10p/mile.
You could be stung for high charges if you damage the car.
If the car's written off, and the insurer's value is less than the leasing company's, you may be liable for the difference.
Is leasing cheaper than buying?
As cars almost always depreciate, it's never a good investment. Yet if you buy a car you'll at least be able to cash in its value when you want to change it. It's different with leasing as you know from the outset that you'll get nothing back at the end of the deal. The key question is therefore whether the amount you'd pay over the duration of the lease is higher or lower than the amount you'd lose by owning the car and reselling it over the same period (so the price you'd buy it for plus any interest costs if you needed to borrow, minus the price you would expect to sell it for).
If it's lower, then leasing would be cheaper than buying, plus you won't have cash tied up in the car as you'll just need to keep up with monthly payments. If it's higher then you would be better off buying the car.
Will you need to pay extra for servicing?
Most leasing providers won't include servicing and maintenance on the car, so you'll need to factor this in on top of your monthly payments, car insurance and fuel costs.
It's likely you'll be offered the option of adding a maintenance package to the deal, which you'll pay for monthly. Policies vary, but will usually cover annual servicing and replacement tyres. Before signing up, get an idea of how much it would cost to pay for the service yourself so you can make a fair comparison, especially as new cars typically don't need servicing in the first year. Also bear in mind that most faults will be covered under the manufacturer's warranty anyway.
Different car finance options compared
Broadly speaking, there are six different ways to pay for a car. The table has the key differences at a glance.
Finance type | Typical length of agreement? | Initial deposit required? | Who owns the car? | Mileage restrictions? |
None – cash savings | N/A | N/A | You | No |
0% credit card | Up to 20 months | No | You (though you'll still need to repay the debt) | No |
Personal loan | 1-7 years | No | You (though you'll still need to repay the debt) | No |
Personal Contract Purchase | 1-5 years | Yes (i) | The finance company, unless an optional final balloon payment is made | Yes |
Hire purchase | 1-5 years | Yes (i) | The finance company, until the final repayment is made | No |
Leasing/Personal Contract Hire | 1-4 years | Yes (i) | The finance company, at all times | Yes |
(i) In most circumstances, though sometimes you can get a deposit contribution from the dealer or structure a lease deal to pay nothing upfront.
So which wins?
Sadly, there is no one-size fits all answer to this (as much hangs on whether you want to own the car and other factors). However, we've included more information on each option below, to help work out which is right for you.
Compare and find a lease deal
To help find a cheap lease deal, there are a host of comparison sites, which scan hundreds of offers from dealers and brokers across the UK. There are two types of deal – stock cars, where the car is already in the UK and usually delivered quickly within a few weeks (and cannot be customised) and factory orders, where there's often a longer few months wait as the car is yet to be manufactured, usually if you're looking to change spec or add any optional extras, such as a panoramic roof.
Don't be put off if the cheapest dealer is miles away as it will arrange delivery to your home address for free, and you'll be able to take the car to any franchised dealership for servicing or if anything goes wrong. If you'd still rather deal with a local dealer then it's worth taking the best quote along to see if it will match or beat it.
Here are our favourite comparison sites due to their ease of use, though combine them for the best range. It's worth playing around with the initial rental amount and the contract length to see how that changes the price, as some deals are only available on certain terms.
In addition to searching by make and model, you're able to see all car deals for your budget if you're not set on which car to go for. There's then a comprehensive number of filters, plus you're able to sort by total cost for true ease of comparison, which is why it's top of our list. It also has a nifty value rating based on this total cost of the lease vs the list price of the car and length of the deal. This can be handy to identify standout special deals, but pay more attention to how much you'd need to pay first.
Again this lets you sort by total cost, though it displays the equivalent monthly cost rather than the total figure that we find easier to compare. It's still handy though as this figure represents how much you are effectively paying for the car per month, when factoring in the upfront cost, and can simply be multiplied by the contract length to get the full cost of the deal.
Another easy to use site with similar features as above, though you're unable to search by total cost. Instead you can only sort by monthly cost or value (which is a score out of 100, using a similar calculation as leasing.com above) which makes it trickier to understand the true cost, as you need to manually add the initial payment to get this figure. It also means that a deal with a low monthly cost with a large initial payment (so higher total cost) could be ranked above a cheaper deal overall, but with higher monthly payments.
You usually can't do the whole process online, so you'll often need to send an enquiry on your chosen car, or ask for a call back. They will then take your details, run a credit check and take payment for any processing fee that's applicable. You'll then be notified once the vehicle is ready and be sent registration details of the car so you can sort comprehensive car insurance. You'll then just need to arrange a convenient delivery date.
When the car is delivered, make sure to take your time in inspecting it inside and out, and make sure it is free from damage or marks. If you find anything, make sure it's noted down before signing to accept it, otherwise you'd be responsible for it when returning the car.
Car leasing Q&A

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