9 Things To Look Out For When Leasing A Car

new car
new car

Owning a car is a big responsibility, but in terms of affordability and practicality, many people are turning to car leasing as the best way to get themselves on the road. Car leasing deals allow you to pay a fixed monthly sum over an agreed period of time, for your exclusive use of a brand new vehicle. But there are significant differences between owning a car and leasing a car, so what do you need to look out for?

Paying a deposit

You will usually have to pay a deposit at the beginning of a car leasing agreement. In many cases this is a lump sum equivalent of between three to six monthly instalments put together. However, this will differ according to the car leasing deal you have agreed.

PCH – what is it?

The most popular car leasing deal option is personal contract hire (PCH). With PCH you don’t own the vehicle and simply hand it back to the leasing company at the end of the lease term, which offers most people the ideal flexibility.

What expenses are covered?

All car leasing deals are different, but most will include the covering of some important motoring expenses which reduce your monthly concerns and liabilities. These will typically include the manufacturer’s warranty, road tax and a breakdown cover agreement.

The newer the better

As you are handing the car back at the end of your agreement (unless you opt for a PCP deal) you don’t need to worry about depreciation. So you can always drive a new car without the concern that its value might drop rapidly.

Driving a new car means you don’t have to worry about the normal problems associated with older cars, and also the technology and fuel economy is likely to be better. All that said, if you want a vehicle that is likely to hold its value and maybe your annual mileage is moderate, then you might want to consider buying it through a PCP deal.

Be careful with insurance

It is possible that your car leasing company will stipulate a specific type of insurance for your lease vehicle. Most insurance companies are fine with covering a lease vehicle, but your car leasing company may insist that you take out fully comprehensive cover rather than third party.


As with any rental agreement, there is likely to be a charge if you end the contract or leave it early and return the vehicle. There may be other charges built into the agreement too, so make sure you are aware of these.


Most car leasing deals will include restrictions on the annual mileage you are allowed to drive, which will affect the size of your monthly payments. There may also be restrictions on whether you can drive the car abroad, and you may need to ask permission to do this.

Condition of the vehicle

When you return the vehicle at the end of the lease agreement, you may be liable for any costs of repairs for anything above general wear and tear. Similarly, you are not allowed to customise the vehicle with modifications, such as a new stereo system, alloy wheels or spoilers etc and you will be charged for any costs of correcting these.

Credit rating

A car leasing deal is effectively a finance agreement like a bank loan, so the leasing company needs to trust you and will carry out background checks. Therefore you will need a stable financial situation and a good credit rating.