What are the different types of car leasing?

company car

Car leasing is on the rise as more and more people enjoy the benefits that it brings.

Car leasing is essentially just a hire agreement between the car hire company and the buyer, where you can rent a vehicle for an agreed length of time. There are many different types of car leasing available to you and it can all seem quite confusing when you first start looking into it. That is why we have gone into a little bit more detail below for you about the different types of car leasing as it is normally split into two different types – those for personal use and those for business use.

For Personal Use

Are you looking into personal car leasing for personal use? Then there are a few options that you can take. The first is a personal contract hire. This is an easy and hassle-free way to run a car where the person hiring the car can pay a monthly rental fixed fee. This fee will be different for everyone as it will all depend on the car you choose, its mileage and the agreement time frame. Many people love this option as you won’t run into any unpredictable residual values when reaching the end of the agreement. At the end of your agreement, the car will then be returned to the company. If you are looking for fixed cost motoring, then this could be a fantastic option for you.

The second option that you have for a personal car lease is a personal contract purchase. With this type of leasing offer, you can benefit from low fixed monthly payments, plus you don’t have to worry about any residual value fall of the vehicle! The finance house guarantees this and you can determine the balloon at the beginning of the contract. This will be decided when looking at the term and the mileage. It is then up to you at the end of this agreement whether you want to purchase the car outright and keep it, or whether you want to sell it back or trade it in. You can then use this equity towards the price of your next vehicle. This option is fantastic for those looking for fixed cost motoring but with some added flexibility.

Some potential customers may want to look into hire purchase. With this option, you will have the option to own the vehicle at the end of your agreed leasing time period.

For Business Use

Again, with business use, there is a fantastic option for you to take into consideration. The first is a finance lease agreement. This works well for businesses as it can be shown as an asset on the balance sheet, meaning you can get VAT benefits. You can choose to either pay the cost of the vehicle, plus interest, over an agreed time period or you can enjoy low monthly rental costs but with a final balloon payment at the end.

Car leasing is a great option to consider whether you need it for business or personal use. Before jumping the gun and leasing the first car you see, ensure you get any questions you have answered and choose a vehicle and price that’s going to suit your needs.