How does leasing work?
Leasing a car is a very simple process, pick your make and model and any optional extras, choose how long you want to lease the car for, how many miles a year you will cover, and how large you want your initial payment to be. Our online calculator will then show you the cheapest monthly amount we can find for your selections. Fill in your details online for one of our broker team to contact you, who will call you ASAP to talk you through the process.
Once you have accepted the quote, our broker team will send you the form to apply for this type of finance, you fill it in and once you're approved by the finance provider and you've signed the finance documents the new car is ordered (or reserved if already in stock). Once the car is ready for delivery you're contacted to arrange a convenient date and time, the car is delivered to your door and the first initial payment comes out of your bank account by direct debit within 7-10 days of delivery, and following payments come out monthly after that.
You keep possession of the car for the agreed number of years, during this time the car's road fund license (road tax) is paid for by the leasing company. You are required to insure the car yourself with comprehensive insurance for the full term, keep the car in good condition, and cover all servicing, maintenance and tyre replacement costs (unless you choose the maintenance option to be included in your agreement).
Several months before the end of your agreement you will be contacted to agree a convenient time for the car to be collected from you. This is also a good time at this point to start looking for your next new car lease! On collection the car will be inspected, and if there is any damage over and above usual wear and tear guidelines, if the tyres need replacement or any other maintenance is needed then you will be sent a bill for the cost of this work. If you have exceeded the total agreed mileage over the term you will be sent a bill for the excess mileage charge at the rate per mile agreed in the contract.
I've always bought my cars, why should I lease?
There are many benefits to leasing over outright purchase, including being cost effective, easy budgeting, peace of mind and hassle-free enjoyment.
The main benefits include:
- Drive a brand new car every 2-3 years staying within manufacturer warranty with all the benefits of the latest technology and safety features.
- No huge initial outlay, so money can be invested elsewhere - as the famous quote goes "never buy a depreciating asset!" most cars lose nearly 60% of their value in the first three years, and can lose even more in a recession.
- Simple, no hassle up-front pricing with big discounts built in to give very competitive monthly rates.
- Guaranteed and easily budgeted costs - one simple monthly fee that can easily be built into the household or company budget with no concerns at the end of the contract, with servicing and maintenance included if required and no nasty surprises.
- Avoid any unexpected bills associated with used cars.
- No selling concerns at the end of the contract, no hassle with part exchange or the feeling a dealership has ripped you off over your car's value, just have the car collected from your home or work and lease another one!
What's the difference between PCH and PCP?
They do both sound very similar as both involve paying a monthly amount for a car, and people do get mixed up easily, but there are some important differences:
PCH or Personal Contract Hire (also known as personal leasing) is a fixed term rental agreement, i.e. you are agreeing to rent a car for a fixed period of time from a leasing company and at the end you give the vehicle back. The car always stays property of the leasing company and there is no option to purchase the car at the end of the agreement, so no hassle with trying to value it or part exchange it, no worries about being in negative equity, the car is simply collected and you take out a new lease and get another new car.
PCP or Personal Contract Purchase is a form of Hire Purchase finance agreement, where you become the registered keeper (your name on the V5 log book) from start, and as part of the finance agreement the car is given a 'Guaranteed Future Value' (GFV) that is set as a large final lump sum amount due at the end of the contract. You pay a deposit, pay monthly payments and at the end of the contract you have 3 choices: you either pay the final GFV payment and own the car, or hand the car back and walk way, or trade the car in and if it is worth more than the final value then you get the difference in equity back.
Orangewheels have ourselves advertised PCP deals from dealerships for years in the past and have found that time and again personal leasing (PCH) has worked out cheaper with a smaller initial payment and smaller monthly payments than PCP, with our dealer quotes getting beaten by cheaper quotes from leasing companies, so being fed up of getting beaten and to help our customers find the cheapest deals we have switched to offering Personal Leasing as our main offering. As the leasing companies buy thousands of cars every year, they receive much larger volume discounts directly from manufacturers than customers are ever offered at dealerships. This is why Personal Leasing is the by far fastest growing way of acquiring a new car with over 1.6 Million PCH deals arranged for UK customers last year.
How long will it take to get my new car?
That will depend on if you are leasing a stock car or if you have chosen a car that needs ordering from the factory. Our broker team has access to thousands of stock deals and will happily talk through what is available quickly with you over the phone when they call you. Stock deals can save you money but are usually based on a limited selection of colours and options as the cars are already built. If you want a very specific colour and optional extras then the car may need factory ordering.
Typical factory order times vary a lot from one manufacturer to another and are usually anything from 2-4 months, however with the issues from Coronavirus hitting the car industry and factories being shut, lead times from some manufacturers are increasing beyond that, but our broker teams can check an accurate lead time for you well before ordering, so you will know in advance approximately when it will arrive.
Even with stock cars, most finance companies legally require a 14 day cooling off period (for you to change your mind on the agreement if needed) before the car is delivered.
Do I need a good credit history to be accepted for a lease?
Short answer: Fairly good, yes! Finance companies have tightened up their requirements a little on all types of credit following the Coronavirus, so those with marginal credit ratings are finding it a little more difficult to get approval, and the company may ask for more forms of proof or a larger initial payment. If you have a poor rating we may be able to refer you on to a specialist company that offers finance on cars for those with poor credit, (though it will likely be at a different payment amount than we are advertising) so we would always say apply with us anyway and we will do the best we can for you and pass your enquiry on to those that can help.
for more information on credit requirements to lease a car, and to check your credit score click here:
What's the difference between business and personal leasing?
A UK business may be VAT registered and therefore may be able to claim back a percentage of the VAT paid on a car leased by the business (typically 50% of the VAT on a lease is reclaimable and 100% of the VAT on any maintenance contract) but the individual using the car would likely then be liable to pay company car tax as a benefit in kind unless the car can be proved to be being left at work and used for business purposes only - and this can be very difficult to prove to HMRC (please visit the HMRC website for further information) . Because of this it is typical for business leasing prices to be quoted as an amount plus vat, where personal prices are quoted as including VAT. We include a simple toggle on our website that allows you to easily switch between personal and business leasing rates.
Do you take part exchange vehicles?
No, our brokers do not accept part exchange vehicles. If you are leasing a car already this is not an issue as your current car is just collected at the end of the contract, if you are new to leasing then we would suggest using one of the many great used car buying services that exist across the UK for just this purpose. For more info click here:
What happens if I go over the agreed mileage?
As part of the agreement the total mileage for the term will be specified, for example if you agree a 3 year lease with 10,000 miles a year then the car should be returned with 30,000 miles or less on the odometer. If you go over the mileage then as included in the agreement is an 'Excess Mileage Charge' set as an amount per mile. So for example if you have an excess mileage charge of 10 pence per mile and you go 1000 miles over the mileage agreed you will be charged 1000 miles x 10p = £100, which would usually be taken as a direct debit payment from your bank account 14 days after the car is collected.
Is road tax included?
Road Tax, or to use it's formal name: 'Vehicle Excise Duty' is paid for by the leasing company for the full period of the lease, and is included in the monthly leasing price you see, so no need to worry there.
Is insurance included?
No, you will need to arrange your own insurance for the vehicle, and all leasing companies specify as part of the agreement that you must provide a fully comprehensive insurance policy for the full term of the lease, they will not accept third party fire and theft or third party only type insurance policies.
Is breakdown cover included?
The car is supplied with the level of breakdown cover that the manufacturer supplies as part of the warranty. This can vary and can be discussed with our broker team before you place an order. If the vehicle is brand new this will start from the date of delivery, on the rare occurrence that you lease a pre-registered vehicle this will start on the date that the car is first registered.
What about vehicle maintenance and tyres?
It is usually possible to take out a supplemental maintenance package that includes the costs of regular servicing and maintenance for the vehicle during the contract, plus any MOT costs and the costs of replacing the tyres due to wear and tear (punctures are usually not included in the maintenance package). This extra package can be added to the leasing agreement for a small extra fee so that you can budget to a simple monthly amount rather than paying servicing costs when they arise to avoid any surprises.
If you do not take an appropriate maintenance and tyre package, then:
You are responsible for maintaining the car in good condition and ensuring that car is serviced and maintained in line with manufacturer guidelines, and leasing companies may stipulate that servicing and maintenance is to be done at authorised dealerships only. If you haven't serviced the car you will be charged by the leasing company for this at the end of the contract.
If the leasing contract on a new car is for longer than 3 years then it is your responsibility to MOT the car at your own cost, and you will be charged a penalty if the car is returned without an MOT.
You are also required keep the tyres on the vehicle within legal tread depth requirements and when returned the tread must be within agreed limits and tyres not damaged. You are required to replace the tyres with manufacturer approved tyre brands in the correct size and rating during the lease term. If you put unauthorised budget tyres on the car that are not manufacturer approved, you will be charged by the leasing company for replacing these at the end of the contract with correct ones.
When do i pay the deposit?
You don't! Personal and Business Contract Hire leasing usually do not include any sort of holding deposit. The initial payment (which is usually made up of a multiple of the rest of the payments) is paid by direct debit typically 7-10 days after the new car is delivered to you and following payments come out a month after that.
The initial payment is not a holding deposit and is usually expressed as a number of standard payments combined, for example: 3+35, meaning the equivalent of 3 payments as the first payment then a standard monthly payment to follow, so if the payment profile is 3+35 and the monthly payment is £300, that would mean the initial payment is £900 (3x £300) followed by 35 monthly payments of £300.
What if I want to end the leasing agreement early?
If you need to end the agreement before the specified date this is possible, the leasing company will usually charge you for this, and penalty charges for early termination are usually around 50% of the outstanding leasing payments owed.
For example if you want to terminate the contract a year early you will likely need to pay the equivalent of 6 months of payments in one go as an early termination fee, so it's well worth making sure the contract is for the correct length up front if possible, rather than just picking the longest timeframe to get the cheapest monthly payments.
Do I pay Orangewheels anything?
No - nothing at all, Orangewheels work as an introducer only and put you in contact with our nominated leasing brokers free of charge. Our current approved leasing broker - Leasing.Cars does not charge any sort of administration fee to set up the leasing agreement either, so all you have to pay is the initial payment, usually taken by direct debit 7-10 days after the start of your agreement once your car is delivered, then the regular monthly payment is taken a month after that.
Can I put my private number plate on a leased car?
Yes, this can easily be arranged. The leased car remains property of the leasing company, so the nominee for the plate needs to be changed with the DVLA. Once you have got your amended retention certificate back, the private plate can be assigned to the newly leased vehicle. The plate is assigned back to you at the end of the agreement. Most leasing companies charge a small administration fee for this service, and our broker team can talk you through it in more detail during the order process.
Can I use the leased car as a taxi?
Most leasing companies do not allow the leased car to be used for work as a taxi, private hire or chauffered vehicle. However, we do have specialist providers that can arrange a hire purchase finance agreement specifically for this purpose.
Can you arrange cars for export outside of the UK?
No, unfortunately not. Our leasing companies can only supply new cars to UK customers, they cannot arrange exports, cars for long term use in other countries or left hand drive cars.
If you are a UK customer but want to use your new car in mainland Europe occasionally for a holiday, business trip etc. then most leasing companies have a period of time the car is allowed to be used abroad for in a year, this varies from company to company so is worth checking with our broker team, but is typically around 30 days maximum in any one year, but you will need to notify the leasing company beforehand that you are taking the car abroad and there may be a small admin charge to arrange this.