Published On: Fri, Jun 6th, 2014

The Benefits Of Car Leasing

Anyone that wants to buy a car has two ways of paying for it; they can buy the car outright with cash, or they can borrow the money and pay it back over a fixed period. The trouble with the former option is that you might potentially need to hand over a large sum of money to pay for your car, and not many folks have lots of money lying around. The latter option, however, is a more-convenient one and is growing in popularity each day.


Car Leasing

There are many different finance packages available to suit people’s individuals needs, and the one that people opt for the most is leasing.

How does leasing work?

The way that car leasing works is simple. You pay a cash deposit for your car, usually the equivalent of 10% of the car’s value. Once you have decided how long you would like the use of the car for, the finance company then calculates how much your monthly payments will be.

Once you have used the car for that period of time and your payments are all up-to-date, you normally have three choices:

  1. Buy the car – you pay a figure known as the “guaranteed minimum future value”, although unofficially people call it the “balloon figure”. You can either pay this balance off in cash, or you can finance it using a hire purchase finance plan;
  2. Hand the car back – if you don’t want the car anymore, and you aren’t interested in buying another car from the dealer, you can hand the car back to them. As long as you have not exceeded any agreed annual mileage limits, and the car is in good general conditions, there will be nothing further to pay;
  3. Trade the car in – you can trade the car in for another brand new one and start the process again. If the value of the car is higher than the guaranteed minimum future value, you will be able to use this difference towards the deposit of your new car.

There are many benefits to leasing a car, the mains being as follows:



According to Listers, you won’t have to worry about the problem of depreciation as you would if you bought the car cash or on a hire purchase agreement. Depreciation hits cars the most during the first three years, so if your lease term is for that period you can avoid that problem completely!


New cars more often

Many people are warming to the idea of changing their cars every three years or so, as after this period car owners start paying for expensive main service costs and repairs for problems caused by age.

The other reasons why it’s a good idea to change your car often is you get to benefit from the latest technologies and fuel-efficient engines that all new cars offer. Not only can you “do your bit” for the environment by driving a car with low carbon emissions, but you can take advantage of cool new features!