Most businesses have always used leasing as a means of paying for their vehicles, rather than buying them outright, and it has been gaining in popularity for personal customers in recent years as well.
Most private new car buyers still take out traditional car finance (like a PCP or HP) at the dealership when they buy a new car. But as prices have been steadily increasing over the last five years or so, there has been a lot more interest in leasing, called personal contract hire (PCH).
Why is this? Basically, the monthly payments tend to be slightly lower. So if you’re keen to get the most expensive vehicle for your monthly budget, you can usually get more with a lease than with a PCP. Or, you can get the same car for a bit less money each month.
We’re not going to go into all the ins and outs of the different types of finance (the links above give plenty of detail), rather we’re simply going to look at how leasing is arranged and what you should look for if you’re going to lease a new car.
Most of this information is only relevant to new car buyers – used car leasing does exist, but it’s still a very small part of the market. Used car buyers looking for finance will usually go with PCP or HP, or take out a personal loan from a bank.
Skip the dealer, order direct or from a broker
New car retail is changing, with several car companies now offering direct sales through their websites, but most private customers still go to a dealership to buy a new car. Personal new car finance is usually arranged at the dealership through the car manufacturer’s preferred finance partner (or their own finance company, for some of the big players).
Leasing, on the other hand, tends to happen away from the dealership and is mostly arranged through brokers or directly through the leasing provider. You can certainly arrange a lease through the car company’s finance company, but this isn’t usually any cheaper than a PCP.
Leasing customers face a wide choice of providers to find the best deals:
- Independent brokers and leasing companies
- Manufacturer leasing offers
- Comparison sites tracking all of them
Independent leasing brokers
Most leasing customers will choose a car from a specialist leasing site. Independents offer a great deal more choice than manufacturer sites, since they’ll offer cars from multiple brands rather than just one.
The biggest leasing operators have very good relationships with the major car manufacturers (which is not surprising, since they may be buying thousands of new cars every year), so the deals are likely to be just as good as you’d get buying directly though the manufacturer’s own leasing operation. Plus you have the option of comparing cars from different brands in one place to work out what’s best for you.
Different leasing sites will offer deals on a range of models from different manufacturers, which means there can be considerable fluctuations in pricing on the same car. So, as always, it pays to shop around. The sites with the most cars to choose from don’t necessarily have the cheapest prices. What might seem a choice of fewer offers on other sites can produce better deals.
Most leasing sites are brokers rather than lease providers. They work with the big leasing companies to provide cars and deals to customers, much like a dealer network selling cars on behalf of a car company.
There’s no substitute for deciding exactly what you want and then spending a few hours online, carefully trawling different leasing sites to find the right deal on your preferred car.
Read more: The best sites for leasing a new car
Leasing comparison sites
While some broker sites will have strong relationships with specific leasing providers for their cars, others will have a range of options for each car.
It works in much the same way as a comparison site for insurance or broadband providers, so you can see who the actual leasing provider is as well as the deal that they’re offering. The comparison site may have offers from other brokers, as well as directly from the lease providers, so these sites tend to offer the most choice. But, like those insurance comparison sites featuring furry creatures or opera singers, they’re not necessarily cheaper as their fees are included in the prices. You may find the same car and deal slightly cheaper by going direct.
What about car manufacturer websites?
In recent years, several car manufacturers have added personal leasing offers to their long-established business leasing services. Often it serves as a way of shifting large numbers of specific models, and to feed their used car forecourts with end-of-lease cars.
Leasing from a manufacturer comes with obvious advantages – you are effectively ‘cutting out the middle man’ by dealing direct, rather than going through a dealership, but you still get all the front-line servicing and maintenance back-up.
The biggest downside is a lack of choice. Manufacturer sites tend to offer just a few grades available, sometimes on cars that are less easy to shift off forecourts, and on by no means their entire model line-up. There’s also the other obvious drawback that you can’t directly compare cars from different brands side-by-side.
If you go to a showroom, they’ll happily provide you a PCH quote on any car in the range, in any specification, but it will often cost you just as much as a PCP on the same vehicle. Leasing is usually cheaper than a PCP because the leasing company has enormous buying power, meaning they’re getting substantial discounts on their cars and paying some of those savings onto you. If you’re sitting in a showroom trying to buy or lease one car, you don’t have anything like the same leverage for haggling.
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