Many drivers are choosing to lease cars instead of buying. Personal leases are becoming popular for those searching for hassle-free driving with lots of flexibility and set monthly payments, but how exactly does a car lease work?
Think of it like renting a new car: this is called car leasing, commonly referred to as personal contract hire or PCH. A down payment is made up front and then you make predetermined monthly payments to finish the deal.
Once all the monthly lease payments have been made for the vehicle, you have two options: return the keys to the leasing company and leave or lease a new vehicle again.
Most of the time, business car leasing functions similarly to PCH. Since the VAT payment can be refunded if the business is VAT registered, the key distinction with business leasing is that advertised pricing does not include VAT.
An application for a business lease must include details regarding the company history, financial standing, and identity of the owner or director.
Since you make a fixed payment over the lease term, leasing payments are typically lower than loan payments overall. The sale price, the interest rate, and the number of months it will take to pay off the loan are used to determine how much each monthly car loan payment will be when purchasing a vehicle.
Leasing includes breakdown insurance and a road fund licence in addition to a straightforward, modest monthly payment, making it easier to plan for unexpected costs like home repairs.
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