Low Mileage Car Leasing; Help & Advice

High mileage personal and business leasing (read more) is a popular choice for customers here at CarLease UK, as many of our customers enquire about vehicle standards, servicing and suitability of the vehicle for their needs... In the same way, customers do enquire about low mileage leasing contracts, as there can be confusion as to whether or not this is possible with contract hire and leasing products.

As CarLease UK are a broker and not a lender, we work with a select amount of finance companies who each have slightly different rules and regulations, so it is crucial to speak with one of the team before coming to any conclusions. In many cases, a finance company will offer a contract which is less than 10,000 miles; generally the minimum mileage will be 5,000 miles but, in some circumstances, this could be 8,000 miles.

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What you need to know about Low Mileage Car Leasing...

It is important that you accurately set your mileage on a contract hire (and PCP) arrangements. If you are not covering 10,000 miles, you are effectively paying a monthly rental for a mileage you are not covering. At the end of the contract vehicles are returned to the finance company and you would not be offered a rebate or refund for mileage not covered. In essence, the finance company would simply benefit from the vehicle being under-mileage.

In the alternative, if you are covering mileage in excess of 5,000 miles per annum, you should not take a contract for this mileage and subsequently take a risk with the excess mileage. If you see an attractive quotation for 5,000 miles, it is understandable you would want to consider this but, at the ned of the contact, your excess mileage which will be far from attractive. In some cases, finance companies operate a tiered mileage policy so that if you dramatically exceed the contract mileage you could be penalised.

In all circumstances, try and accurately calculate the mileage at the outset and work on this basis.

What else is there to consider with Low Mileage Leasing?

Another interesting consideration in relation to a PCP, which is somewhat covered above, is that if you set the PCP contract based on the mileage which is too low, the Guaranteed Future Value (GFV), will not be appropriate for you. This leads to a situation whereby the GFV, or balloon as it is termed, is not achievable because your mileage is not correct. This is what is termed as “negative equity”. While you do have the right to return the vehicle under a PCP arrangement, you will still be charged for any mileage in excess of that for which you are contracted. Again, accurately calculate the mileage at the outset.

Is it better to buy a car or lease a car for low annual mileages?

This is another question that does get raised with us. We have produced a number of Help Articles on the advantages and disadvantages of leasing vs buying, as there is no clear answer or rule of thumb. In each case, it depends on your individual circumstances as to which is better for your needs. As we believe whole heartedly in treating customers fairly, we would never recommend one financial product over another.

Regardless of your annual mileage, it is essentially a question of considering the key features of the product and choosing which one is best for you. For example, if you are considering retaining the vehicle long-term because of the low mileage, a purchase style agreement such as Hire Purchase and a PCP are more suitable. With contract hire it is a fixed term agreement, based on using the vehicle, so it would not be a flexible long-term option.

Should I have a petrol or diesel car for low mileages?

This is a another topical question which we have addressed in a series of blogs and reviews. Historically, political movements have encouraged the growth of the diesel engines and, as manufacturers have produced more efficient engines, customers have welcomed the diesel option with open arms. However, in some cases (particularly with low-mileage / start-stop driving) customers are experiencing issues with the DPFs on the vehicle. As they are not driving the vehicle in the recommended format, the DPF will become blocked and this must be cleaned at the customer’s cost.

The recent shift in policy has arisen due to the fact that diesels are now being recognised as more polluting and inappropriate for some drivers. There is also discussion about charges for drivers commuting into cities. As a result, many low-mileage users are ordering petrol cars. Recent research (publish May 2017) suggests diesels are down by 20% compared with 2016.

If you have any questions relating to mileage on your contract, please do not hesitate to get in touch, you can also read more help and advice in our dedicated Help & Advice Pages or check out some of the recent lease car reviews in our Blog. You can also search for a cheap lease car deal with This Page on our website.

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