Best Car Leasing Companies

Car leasing is becoming an increasingly popular way for buyers to get behind the wheel of a new car. Rather than purchase the car, you simply lease it for a fixed term.

It's also know as Personal Contract Hire - or PCH - and is essentially a long-term loan or hire of a vehicle rather than a purchase.

Traditionally leasing was only available to businesses, but the market for personal leasing has boomed, so there are plenty of deals available.

Car leasing suits people who don’t want to be tied into the ownership of a car, want to be able to change cars regularly and are happy to potentially pay a small premium to do so. Think of it a bit like a mobile phone contract.

Best Leasing companies

Here's the lowdown on the best leasing companies to consider if you're looking to lease a car.

What are the pros and cons of leasing?

If you like the idea of being able to change your car regularly then a car lease holds a lot of appeal. Some companies can offer leases of 12 months, so you could change your car as frequently as once a year.

A car lease also makes it easy to budget, as only changes in the interest rate can affect the cost of your monthly payment and you don’t have to worry about sudden maintenance bills with a service contract. You are also unaffected by depreciation, as you are unaffected by the value of the vehicle at the end of the term.

One of the main drawbacks of a car lease is that because you will not own the car at any point, straying outside the agreed terms for mileage and condition at the end of the term will mean financial penalties, which could add up to a significant sum.

You are also tied into the contract for the duration, so if you decide to end the agreement for any reason you will most likely have to pay a fee to do so. Finally, a car lease may be more expensive than a competitive hire purchase agreement, so you may end up paying more to hire a car than if you had bought it outright.

Do I need my own insurance for a lease car?

You need to insure a lease car yourself, even though it is not owned by you during the hire period. Although you are not paying to take ownership of the car, it is in your custody and is essentially your responsibility for the duration, which means the vehicle insurance is paid for by you.

The finance company will have their own policies to cover a loss on the vehicle but this does not cover your use of it.

What happens at the end of a lease?

Unlike a PCP where there is the option to buy the vehicle at the end of the term, a PCH is strictly a lease, and so there is no option to buy.

At the end of the term the vehicle is returned to the leasing company for resale, and therefore it has to meet the mileage and condition criteria that were given at the start of the agreement. Failure to meet these criteria will mean paying additional penalties.

Can you end a lease early?

It is possible to end a lease early, but because of the way in which lease cars are funded it is not simply a case of returning the vehicle and walking away.

If you are having financial difficulties and struggling to meet your monthly payments, your first course of action should be to contacting the leasing company and explain the situation. They may be able to assist you by re-arranging the terms of your agreement and lowering your monthly payment.

If this option is not available or you are determined to end the agreement early, what happens next depends on the leasing company and the terms of your agreement, but you will be liable for a proportion of the remaining monthly hire costs - anything from 50 per cent to 100 per cent.

This process is called early termination, and individual leasing companies will have different ways of calculating the early termination fee as well as determining your eligibility.

The reason for this is because the vast majority of lease vehicles are purchased by the finance provider in order to provide the vehicle for your use, and your monthly payment is calculated on the calculated cost of the vehicle use and its depreciation during the hire period.

Unless the vehicle can be sold at a price which clears the remaining finance and more, the leasing company will lose money on the deal - hence the result is usually a requirement for you to pay early termination fees.

Will I need a credit check to lease a car?

Yes. Like a loan or credit card application, a PCH requires a credit check. Because you don't own the car, any lease company will need to ensure that you can make the monthly payments over the term of the agreement.

Be wary of brokers or leasing companies that claim they can lease a car without a credit check - it's very likely they are not reputable. There are however, companies that will still lease you a car if you have a poor credit rating.

>> Read more on credit checks

Ask HJ

Can I renew a lease at the end of the agreement, give it back or buy the car?

We have a Hyundai Kona, which is shortly coming to the end of a three-year lease. It was brand new and top of the range when we got it and it's done less than 15,000 miles. We like the car, although at times we wish it was a bit bigger and higher off the ground. Should we try to renew the lease for one or two years, give the car back at the end of the three years or buy it and keep it until we trade it in for another car? Your thoughts would be appreciated. Alternatively, if we did give it back, what medium-sized and medium-priced SUV would you suggest? It would need to be relatively comfortable driving down our rough road. We also don't want a Skoda.

Usually, the leasing company would expect you to return the car at the end of the agreement – although some will offer the chance to extend it. They might be more willing to do this as you've not covered many miles. You won't be given the chance to buy it outright, unless it's a PCP finance agreement (rather than a lease). Consider a Citroen C5 Aircross as its replacement, or a Peugeot 3008.

Answered by Andrew Brady

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