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Why Lease
Even if you didn't think you were in the market for a new car, it'd be worth spending five minutes reading this to understand what Hollyfield Benefits can offer you, and why it might be worth a rethink!
Personal car leasing is becoming increasingly popular yet many drivers who could benefit from leasing their car are still taking out car loans or hire purchase agreements to buy their vehicles.
The main reason for the reluctance to lease is usually a lack of knowledge of the benefits of leasing and confusion caused by the terminology that surrounds it. Here we explain personal car leasing and why it may be the ideal choice for you.
Is leasing for me?
Everybody knows that as soon as you drive a new car off the forecourt it starts to lose value.
So, if you take out a car loan or hire purchase agreement to buy a car, you are simply paying a set amount a month for something that is losing, not gaining, value.
Is this you?
You finance a car over 60 months but in 3 years you want a new one. At first, you think you can sell your car until you realise�
YOU OWE MORE THAN IT'S WORTH!
So you go to the dealer to try and work a trade and you end up burying all that negative equity into another deal.
And the cycle continues.
A lot of people have good intentions of paying off their car loan and keeping the car at least for the duration of the loan.
If you actually do this, you probably don't want to lease.
Unfortunately, most people end up trying to get out of their loan early because they want a different car. Or they decide they want a lower payment so they refinance their current loan.
How does it work?
There are two main options for private buyers:
- Personal Contract Hire (PCH)
- Personal Contract Purchase (PCP)
Personal Contract Hire (PCH) is an agreement between an individual and a car leasing company. It covers use of the car for a set period of time and mileage, in exchange for a set monthly fee. Usually, the car will be returned to the lease company at the end of the agreement.
This has the benefit of you not having to find a buyer, but you have to pay charges for any damage and additional mileage. PCH includes road tax.
Personal Contract Purchase (PCP) is a way of funding a vehicle through fixed monthly payments over a set period of time and mileage. The main difference is that at the end of the lease term you have the option of either buying the car, selling it and keeping any equity, or simply handing the car back. PCP also includes road tax.
If you choose to buy the car, the final payment is called the Balloon Payment, which is agreed before the lease is signed and is a guaranteed projected value of what the car will be worth at the end of the contract.
Peace of Mind
Both PCH and PCP can be supplemented by a maintenance package that covers the cost of all mechanical repairs and normal wear and tear on tyres in exchange for a set monthly fee.
If you are like most people, you will ALWAYS have a car payment. If you will ALWAYS have a car payment, you should absolutely consider leasing.
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