What Is Contract Hire?
Contract Hire, also known as Car Leasing, is still relatively new to the UK despite being very popular in the USA where around one out of four cars on the road are leased. Despite becoming increasingly popular in the UK many people are still reluctant to choose this method of buying a car because they do not fully realize what is included.
The first thing you should be fully mindful of, is that from the instant you turn the ignition in your new car, it is already losing value. Whether you take out a loan or lease a car - it will always be going down in value.
Therefore, the main benefits of leasing a car are as follows:
- You only require a small deposit, generally 3 monthly payments in advance.
- The lease will often include maintenance and road tax.
- The array of cars open to you in terms of cost is greater than that of buying.
- Your monthly repayments can be up to 55% less than that of a loan.
- You can hand in your car and get a fresh one every 3 years.
- Cost remains same throughout the lease.
Whilst car leasing costs will vary, they are all influenced by the cost of the car, age, mileage, residual value and general condition. A car that depreciates slower in value and has lower mileage will be cheaper to lease.
Be aware though, you may also need to take out complementary insurance polices, such as gap insurance.
