Cheap Car Leasing
If you’re in the market for a cheap new car, car leasing is considered one of the most cost-effective forms of car finance. But what makes car leasing cheap, and in what circumstances can car leasing prove to be a better option than buying outright?
This guide to cheap car leasing will explain how the process works and how you can grab a cheap car leasing deal.
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What is car leasing and how are prices decided?
Despite the obvious financial benefits of cheap car leasing, many are put off because they believe the process is complicated and buying is easier. In fact, car leasing is straightforward and there are vast advantages to exploring this option.
Firstly check out what makes and models you’re interested in via our search engine using your own unique criteria such as the length of contract you want and how much you’re willing to pay.
Any car you choose will have an ‘On The Road’ price – that is the money it would be sold for at a dealership – and this car will depreciate over the years. The length of your lease agreement and the monthly payments you make essentially ‘pay off’ this depreciation and the vehicle’s value at the end of your contractual term is its ‘residual value’.
With this in mind, the higher the residual value of the car you lease the cheaper the car leasing deal will be.
If you go for personal contract hire (PCH, and what people usually mean when they say ‘leasing’) you simply return the vehicle to the leasing company when the lease term is over and lease something else.
Why is it cheaper to lease a car than buy a car?
It is cheaper to lease than to buy because you are only paying off the depreciation of the vehicle meaning you don’t lose out on huge depreciation personally. Plus leasing companies can use their influence to get better deals on cars that sell well, and reducing the retail price narrows the gap between retail and residual values, thus lowering monthly payments even further.
The key advantage to car leasing though is that the initial payment is comparatively low. A leasing company will ask for the equivalent of three, six, or nine monthly payments upfront, so you don’t have to raise a huge amount of cash for a deposit as you do with other forms of car finance. The level of initial payment is up to you.
With this in mind, you may find you are able to afford cars you have previously dismissed. This is because premium manufacturers like Audi, Range Rover and Mercedes-Benz all have great residual values and though the purchase price might be high, residual values will be equally high which has the knock on result of meaning lease rates will be comparatively low.
One thing you should be aware of is the importance of having a realistic mileage figure when you lease. Manufacturers use the mileage limit to determine the residual value of the car, so if you exceed this total you will be charged for excess mileage.
How can you secure a cheap car leasing deal?
There are many steps to finding a cheap car leasing deal:
- Search online – We currently host over three million deals on our site from hundreds of dealerships and brokers. Deals are constantly updated.
- Do your research – Put as much thought and planning into leasing a car as you would if you were buying it outright. Research the model you want, take them for a test drive and choose which is best for you.
- Think about the type of vehicle you want – Because premium cars often have good residual values, a seemingly more ‘expensive’ car can often be more cost-effective than leasing a mainstream alternative. The best cars to lease will have a residual value of more than 50% of the retail price.
- Think about when to lease – One of the best times to shop for cheap car leasing deals is just before new registrations are introduced in March and September as many dealers have large stockpiles of cars that they need to move on quickly to take on new stock.
- Use your own assets – To reduce the cost of a car leasing deal, consider offering the current vehicle you drive as a trade-in. This will help to reduce your monthly payments.
- Haggle – Don’t be afraid to haggle! You will be best equipped to haggle if you put in research ahead of time and familiarise yourself with similar deals on the market.