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When used correctly, leasing can be an easy and affordable way of driving the car you want. However, like any contract, it’s important to understand your options and to make a realistic decision on what vehicle to go for, based on what you can afford.

When it comes to leasing a car, there’s a big difference between the types of contract available –  personal contract purchase (PCP) and personal contract hire (PCH)

To help you understand your options, Jonathan Nolan, general manager at UK Carline has created a guide to help you make an educated decision, and to ensure you avoid any unnecessary debts at the hands of attractive car deals.

Do your research

There are two main types of personal leasing options available: personal contract purchase (PCP) and personal contract hire (PCH).

PCP, the type of lease that came under fire in the investigation, allows you to put a down payment on your vehicle at the end of the contract, meaning you can effectively purchase the car once your lease has run out.

The option to purchase a vehicle at the end of the contract makes PCP an attractive option initially. However, research suggests that only 1 in 5 people actually choose to purchase their car at the end of a PCP [1]. With monthly repayments often significantly higher than those on a PCH agreement, consider whether you’re really going to want the same car after your contract has run out, or if you’re more likely to want to upgrade to a newer model.

If it’s the latter, personal contract hire (PCH) could be a better option, this allows you to pay monthly for a car, and return it at the end of your contract. As well as offering lower monthly payments (since you’re not paying off the interest of the sizeable final payment of a PCP), many agreements come with full maintenance agreements in place, meaning you don’t have to worry about costly bills at the garage.

Be aware that you will have to agree the length of the lease and your mileage before you sign the dotted line, although some providers will allow you to amend your mileage during your contract, so check if this is an option with your contract.

Think about what you can realistically afford

Before taking out any leasing agreement it is important to work out if you can realistically afford the repayments. That flash new model might look the part but if it’s going to stretch you too much then it might be better to choose a more affordable vehicle.

Similarly, consider what you want at the end of the contact and be realistic. Will you have enough cash at the end of the lease to put a down payment on your vehicle? If not, you should consider whether a personal contract hire agreement could get you a better deal.

Shop through an independent

Once you have done your research on the leasing options available, it can be a good idea to go through an independent leasing company rather than directly to a dealership.

Going independent means you’re likely to get less pressure from salesmen working on commission, and won’t be pushed towards any particular models they have been tasked with promoting.

Independent leasing companies are specialists trained in motor finance. With a wide range of models and types of leasing contracts available, they can offer expert advice and may be able to recommend a car and contract that’s better suited to you.

Go through a reputable company

Whether you go independent or directly to a dealer, it is important to choose a company which is authorised and regulated by The Financial Conduct Authority (FCA). The FCA only endorses responsible lenders and states that companies should ‘Treat Customers Fairly’. Reputable companies will be looking to safeguard customers rather than make a quick sale with a deal that isn’t right for their circumstances, so it’s worth doing your research to make sure you pick a company which adheres to the FCA’s guidelines.

For more information about how to lease a vehicle and the options available, go to:

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