Car Leasing Explained UK - Personal Contract Hire (PCH) - How Does Car Leasing Work?

Everything you need to know about leasing a car in the UK! In this video, I explain in detail how car leasing works and also recommend some of the best websites I used to find the cheapest car leasing deals for personal contract hire (PCH) or business contract hire (BCH).

Leasing a car is similar to hiring a car, but for a much longer period of time - 2, 3 and 4 car leases years are the most common. Lease cars are brand new, however, you do not own the car and you will not receive a V5 logbook - you will, however, be the registered keeper (unless it is a business lease).

Road tax (Vehicle Excise Duty - VED) IS usually included for the duration of the car leasing contract.

Personal and business leases available are available along with maintained and non-maintained lease deals. If you choose a maintained car lease it will cover all costs for servicing, tyres and general maintenance e.g. bulbs & wipers.

Lease deals usually consist of the following components:

• Initial Payment / Deposit - The initial rental is non-refundable and is usually collected within 2 weeks of taking delivery of the car, it is not payable upfront.
• Lease Term / Duration - This is the length of the lease and the most popular lease durations are either 23, 35, or 47 months following the initial rental.
• Annual Mileage - If you exceed the agreed total mileage for the duration of the contract you will need to pay excess mileage fees.
• Maintained or Non-Maintained - Maintained lease agreements will cost more per month than non-maintained leases.

It is possible to add optional extras to a lease car - you will usually pay the full cost divided over the term of the lease agreement. It is also possible to pay for all optional extras upfront as part of the deposit / initial rental.

Lease cars are usually delivered by driven delivery or by a transporter - if driven delivery is used then the delivery mileage will be deducted from the overall mileage allowance. If you are leasing from a dealer or dealer group it may be possible to collect your car direct from the dealership.

You are responsible for servicing a leased car in accordance with the manufacturers service schedule. If you do not service the carr or miss a service then you will be liable for a fee when the car is returned.

Even if you have a lease that includes maintenance you will still need to arrange this by calling your provider to let them know a service is due.

Lease cars need to have fully comprehensive car insurance, however, you must tell the car insurance company it is a lease car as you are not the only - just the registered keeper.

If you have a 4 year lease deal then you will need to get the car an MOT from the 3rd year. If you have a 3-year lease deal it is worth consider returning the car a few days early to avoid having to get a last-minute MOT.

I would also recommend purchasing GAP insurance for a leased car as in the event of a total loss the GAP insurance will pay out the difference between what the car insurance pays vs what is still owed to the finance company.

As lease cars are brand new car they come with a full manufacturer's warranty.

At the end of the lease, you will be contacted to arrange inspection/collection - sometimes this is the same day, other times the car will be inspected prior to collection.

The car will be inspected for any damage that falls outside of fair wear and tear. The inspector should advise you of any additional fees on the day and sometimes these can be negotiated with the inspector or at a later date with the lease provider. If your car has damage it may be cheaper to get it repaired before collection.

It is usually possible to end a lease early, however, you will be charged an early termination fee e.g. 50% of remaining payments.

Leasing companies/brokers and main dealers promote deals they have access to via main dealer groups, manufacturers and finance companies. Brokers often have access to a wider range of deals and cars than main dealers as they work with multiple finance houses and manufacturers.

Sometimes brokers have access to deals that main dealers can’t compete with whereas sometimes main dealers can match/beat broker prices and often won’t have any admin/booking fees.

SHOP AROUND and always compare overall costs including deposit, monthly rentals, and any additional fees.

If you are looking for cheap car leasing deals or want to compare car leasing offers I would recommend these 3 comparison websites:
Cars2Buy - https://www.cars2buy.co.uk/personal-c...
Leasing.com - https://leasing.com/
WhatCar (Main Dealers) - https://www.whatcar.com/car-leasing/

What the BVRLA fair wear and tear guidelines? You can download them here:
https://tinyurl.com/qnto7yg

If you have any questions about car leasing, please let me know in the comments and I'll reply to everyone!