Understanding leasing: Common questions you may need to ask.
You are thinking about leasing a car but are a bit daunted by the prospect because of all the provisions in contract. Here are the answers to the questions you need to consider.
How and when do I pay my rent?
The usual way to pay rent for a Personal Contract Hire car is by monthly instalments, beginning one month following your initial down payment. Most companies prefer payment to be made by direct debit straight from your bank to theirs, although some will accept bank transfer. Paying in cash however is not an option. It is important to remember that most rental deals specific the annual mileage you are allowed to cover and if you exceed the penalty can be expensive. You will also be subject to a credit check and may find it difficult, though not impossible, to lease a car if you have a poor credit history.
Can I make improvements?
A Personal Contract Hire Car does not belong to you and unlike a rent to buy vehicle, it never will. So you are limited in terms of the improvements you can make Sure, you can personalise it with accessories that can be easily removed, such as seat and steering wheel covers and car mats, but you cannot do any mechanical alterations or adaptations that are irreversible, including fitting a state of the art sound system, changing the colour or a customized paint job.
How long is the lease?
You need to decide whether you want the car on a short-term lease of up to 24 months or a long-term option which can be anything from two to 5 years. The shorter the lease the more expensive it is likely to be. If having the latest model of your favourite model is important to you, don’t tie yourself into a long lease as it won’t be too long before a newer car catches your eye and you want, if possible, to avoid expensive termination fees. Shop around for a firm that can meet your requirements and tell you what you need to know about leasing.
How much is the security deposit, and do I get it all back?
Let’s be clear, it isn’t really a deposit, you aren’t buying the car, so you don’t get it back at the ned of the lease period. You will be asked to pay a large contractual down payment which is usually equivalent to your monthly payment times a specified number of months. Some companies today ask for a large lump sum, £1000, £2000 plus, depending on the type of car you are leasing. The down payment is part of the cost of the overall contract, the more you put down, the less your monthly commitment will be and vice versa.
How do you deal with maintenance and emergencies?
The general practice for the leasing firm to offer an optional maintenance package which you can pay for as part of your monthly payment, or separately. If your vehicle needs attention you can take it to a main dealer of your choice and have the work done under the maintenance package. Most repair shops will provide you with a courtesy car whilst your rental car is off the road.
So there are some of the important questions to consider when leasing for all kinds of drivers from businessmen to busy suburban mums.
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