Personal car leasing is probably something you have heard a lot about from friends, colleagues, relatives, radio adverts or even online. However, like many new customers, actually understanding what this product is can be somewhat confusing.
Let’s start are the beginning ... car leasing is a generic term for a number of financial products; what we are referring to here is a product referred to as personal contract hire.
Contract hire was originally designed for businesses, as this was a competitive and tax-efficient product. However, as contract hire grew in popularity, more and more people began to see the benefit of the product for themselves in an individual capacity. The process for the two is almost identical.
Over the last 10 years, the market for individuals has grown considerably, as more finance companies, manufacturers and businesses have developed a full suite of personal products to meet this public demand.
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This is actually more simple than it would first appear. In essence it is an agreement between an individual and a finance company, whereby the individual will use a vehicle for a fixed period of time i.e. 2 or 3 years and covering a predetermined amount of miles per annum. At the end of the agreement, the vehicle will be collected and the customer can either lease a new car or decide on a different option. Unlike buying car, a customer never owns the car.
Customer “Mr A” wants to lease a petrol Nissan Juke. He wants to use the vehicle for 3 years and his annual mileage is 12,000 miles. He provides this information to the team at CarLease UK.
Our account manager will then calculate the monthly cost of the vehicle based on those options; in this instance let’s say it is £200 per month with an initial payment (or deposit) of £600. This information is provided to Mr A, together with proposal form (application for credit).
Mr A completes the proposal form and returns it to his account manager, who submits this on Mr A’s behalf. Once credit has been accepted, an order form is produced for Mr A to sign and return. We will also ask for copies of a driving licence and utility bill as part of the process.
Once the relevant proofs have been received, we will produce a series of documents relating to the car leasing arrangement i.e. contract, direct debit and vehicle delivery note.
When Mr A has signed and returned these, delivery of the vehicle (included for FREE with all our prices) is arranged for a date which is convenient to Mr A. The vehicle is delivered and Mr A inspects the car to ensure that it meets his satisfaction; returning the delivery note to us when happy.
Around 7-10 days later, the initial payment (or deposit) which has been agreed between Mr A and CarLease UK is taken via direct debit. Following this, regular monthly payments of £200 are taken via direct debit for the next 35 months.
6 months prior to the end of the contract, Mr A will receive a call from us to inform him the contract is coming to an end. Around 3 months before the end of the contract, Mr A will either decide on the car he requires next or will inform us that he no longer requires the car. On, or before, the contract end date, a representative will collect the car.