Everything you need to know about leasing

Vehicle leasing: Confused what this actually means? 

Or simply just interested in finding out more about car leasing? Well, you’re in the right place as we’re giving you all of the deets about leasing

Now, it would be impossible to cover everything to do with leasing in one blog.

But what we can do is give you all the important stuff, the need-to-know information, without all the fluff.

Leasing: What is it? Why is it a good idea? Or is it a bad idea?

We don’t think so. But then, we are a leasing company and big fans of the idea.

We'll try to answer all your questions, as simply as possible. We want you to be able to leave this blog feeling confident that you understand vehicle leasing.

Let’s dive right in.

Why should I consider leasing?

Affordability and flexibility. Two words that could bring a smile to anyone’s face.

By leasing a new car, you can set up monthly payments to suit your lifestyle and drive the car for however long you need it.

Do you long to get out and drive the newest models of cars, but can’t afford to buy them outright? Leasing gives you the opportunity to do just that.

Depending on your budget, you can set up a contract to drive the latest models and pay monthly, without the commitment of buying a car. 

You don’t have to worry about the car decreasing in value because you don’t own it. You can even set up a monthly maintenance payment, so you don’t have to worry about unexpected repair costs.

A maintenance contract lets you include the costs of maintaining your vehicle (those not covered by a warranty) in your rental payments.

Don’t you just hate the faff of trying to sell your car? I know I do.

Whether you try Facebook Marketplace or Autotrader, selling your car is both a chore and a bore.

With leasing, you can avoid the need to sell your car. At the end of your lease, you simply just return the car.

What’s not to love?

How does it work?

Leasing is pretty straightforward once you understand what it really is.

You find the perfect deal for you. Browse our top offers or use our handy search tool to compare lease deals on cars, vans, and commercial vehicles.

Once you have decided on a vehicle, you can apply for finance by filling in a short and simple form. The Carparison team will then be in touch to talk through your options and a potential leasing contract.

If you're not sure which car is right for you, you can get in touch with our leasing experts to talk through your options, with zero pressure. They're a helpful and friendly bunch.

Your leasing contract will outline how long you can lease the vehicle for, how much you’ll pay each month and how many miles you can drive.

Quick tip: calculate your weekly mileage x 52, plus extra for holidays and any long journeys.

Which then leads us on to costs. What costs are associated with leasing?

What are the costs involved with leasing?

Transparency is key. We don’t want you hit with secret costs that suddenly make leasing not so affordable.

• Initial payment (1-9 months’ rental upfront)
• Admin fee (£298.80, VAT included)*
• Monthly payments to keep that dream car a possibility
• Optional maintenance cover for stress-free servicing and maintenance
• Running costs (insurance, fuel, etc.)
• Excess mileage fees if you go over the agreed limit
• Returns re-condition costs for anything beyond fair wear and tear

*Price correct at time of publication, and subject to change.

What are my finance options?

There are a couple of different finance options available that are sure to cater to your budget and lifestyle.

But what are they? And what do they mean?

Personal and Business Contract Hire

Sounds fun, right?

Well, if you like finance terms it might be.

Personal Contract Hire (PCH) or Business Contract Hire (BCH), otherwise known as personal and business leasing, are popular choices for financing - and they're our bread and butter.

Essentially, you lease your desired car over an agreed period for a set monthly fee, based on the difference between the car’s initial value and its projected depreciation at the end of your contract.

The better the car holds its value, the lower your payments will be, which means you could potentially lease a much newer model than you could ever dream of buying. 

Great for those who want to: Drive a new car every couple of years while keeping costs down with a smaller deposit and low monthly payments.

Personal and Business Operating Lease

With a Personal or Business Operating Lease, you'll pay monthly for your hired car. You will agree the length of your contract, but it means you can hold onto the car for as long or as short as you want.

How much you pay each month depends on the car’s value and will be agreed on when you sign the contract, so there are no hidden costs.

But if you terminate the contract early, there will be some additional charges.

With a Personal Operating Lease, you'll also be classed as the registered keeper of the lease car (which could mean cheaper insurance for you).

Great for those who want to: Manage their budgets with fixed monthly rental payments and potentially get cheaper car insurance.

Personal Contract Purchase 

Want the option to buy your dream car at the end of your contract?

If this sounds like you, Personal Contract Purchase (PCP) could be the one for you.

Like leasing, PCP is also set up as a monthly rental payment with an agreed interest rate, and you can either hand the car back, trade it in or buy it for the agreed balloon payment at the end of your contract. However, it's often more expensive than leasing, and if you know you don't want to buy the car, might not be the best finance plan for you.

Great for those who want to: Have the opportunity to purchase a new car through a secure plan to suit their budget.

Returning a leased vehicle

At the end of your contract, your funder will contact you to guide you through the process of returning your lease vehicle.

No surprises sprung upon you in your leasing journey.

Once you have returned the vehicle, it will be inspected against the fair wear and tear guide. Cars endure a lot while on the road, so it is understandable to undergo some wear and tear.

Although it will be outlined in your contract, here is a list of acceptable damage for when you return your lease car:

• Bodywork: Minor dents (door-to-door contact types) under 13mm in diameter. Up to two dents for cars under two years old, and up to four dents for cars four years old
• Scratches: Light surface scratches that haven’t gone through the topcoat and can be polished out
• Paintwork: Chipped paint from everyday use, as long as it hasn’t reached the base coat or caused corrosion
• Previous repairs: Repairs must meet an acceptable standard
• Scuffs: Marks up to 5cm that don’t impact the car’s overall appearance
• Windscreen: Chips under 5mm that don’t obstruct the driver’s view (maximum two per windscreen)
• Headlamp lenses: Minor chips that don’t affect appearance or lamp efficiency
• Windscreen edges: Light scratches around the periphery are fine

For the interior and tyres:

• Carpets, trim, and upholstery: Normal wear and tear is expected
• Seat covers: Repairs must be done to a high standard
• Telephone/accessory removal: Texture repairs or colour-matching plugs are acceptable
• Tyres: Tread must be at least 1.6mm across 75% of the tyre (in line with MOT)
• Wheel rims: Minor scuffs or damage under 25mm on the edge or face

For general wear and tear:

• Stone damage: Minor dents or deformations, as long as there’s no major corrosion
• Sidewalls: Scuffed areas that can be cleaned
• Luggage area: Light soiling from normal use and minor scuffing to door and luggage sills
• Rubber seals: Minor damage or small splits in rubber seals are fine
• Oil and seals: Minor oil dampness around seals is okay as long as there are no drips

Our best advice is to be honest about any damage when you return the car. The process is much easier if you inform the agency, whether major or minor, before their comprehensive inspection.

After all, they say honesty is the best policy.

We have now covered the fundamentals of leasing: why is leasing good? How does it work? What are the costs involved? And how does returning the lease vehicle work?

But I am sure you have more specific questions too.

Let’s jump straight to it.

FAQs

Can you lease with a bad credit score rating?

The million-dollar question. Poor financial decisions in the past shouldn’t prevent opportunities forever.

You can still lease a car with a bad credit rating. When leasing a car, a strong credit rating can improve your chances of your finance application being accepted though.

If you have a lower credit score, the lease provider may see you as more of a risk. However, this doesn't mean it isn't possible.

There’s no magic ‘minimum credit score’ to lease a car, as a good to excellent credit score will show funders you are low risk and that they can rely on you to make your repayments on time.

Are car leasing companies regulated?

Yes, car leasing companies are regulated.

The Financial Conduct Authority (FCA) regulates all financial services in the UK, ensuring customers stay protected and keeping leasing companies like us on our best behaviour.

Is car insurance included when leasing?

Short answer? Nope, but that’s not a bad thing.

When leasing a car with Carparison—whether it’s a Vauxhall or an electric dream machine—you’ll need to arrange your own fully comprehensive cover.

Why? So you can pick your preferred insurer, bag any no-claims discounts you’ve been building up, and dodge being tied into anything less than perfect.

It’s like planning your own party—why let someone else pick the playlist?

How do car leasing companies make money?

Here’s how it works: we introduce you to the lease deal of your dreams, and in return, we earn a commission from the funder. Simple enough, right?

But let’s clear the air—Carparison is here to break the mold. Transparency, honesty, and integrity drive everything we do.

In fact, we’re proud to be the first leasing broker in the UK to offer full commission disclosures online, for both personal and business contract hire agreements.

You can find out what commission we will get just by looking on the deal.

Can new drivers lease a car?

Yes. You (usually) just need to be over 18 years old to lease a car. Some places, you will need to be over 21 years old.

Younger and new drivers often prefer small cars. Affordable, practical, and cheap to run – all important factors for our new drivers when insurance is often very steep.