Car Leasing Guide
Want a brand-new car that’s affordable to run on a monthly basis and is hassle-free, too? Have you heard about car leasing?
Here we explore the concept of car leasing and consider all the pros and cons of taking a brand new (or used) motor through this smart form of vehicle finance.
There are lots of different ways to drive your dream car - and one of the most popular methods these days is through leasing.
According to the latest industry stats, there are more than 1.9 million leased vehicles on UK roads today, and that figure creeps up each year.
But what is leasing, and why would you want to experience what’s essentially an extended rental when you could own a vehicle instead?
We talked to the experts at Select Car Leasing, the UK's most trusted and largest car leasing firm, to learn the pros and cons. And here’s everything you need to know:
Car leasing - in simple terms
When we talk about leasing, what we’re often really talking about is something called ‘Personal Contract Hire’, or ‘PCH’ for short. Business Contract Hire (BCH) is, rather obviously, how businesses finance their lease vehicles.
You’re typically looking at brand-new, factory fresh cars and vans with just delivery miles on the clock (though you can now lease a used vehicle, too, see below!).
A lease essentially works like a long-term rental agreement. You choose the car, you decide how long the contract should last - which is typically between 2-4 years - and then you pay a fixed monthly fee for the duration of that time.
You don’t own the vehicle - the finance company holds the V5 ownership document.
When the contract ends, you just hand the car back and walk away - leaving you free to choose a new lease vehicle instead (hence the ‘hassle-free’ point above).
Why is leasing so popular?
Buying a new or second-hand car outright can be expensive. The average cost of a new car in the UK is now north of £40,000.
And when you purchase new, you’re hit with depreciation costs the minute you drive off the forecourt. With an older second-hand car (particularly one that falls outside the manufacturer’s warranty, which is where MotorEasy comes in) you also run the risk of costly repair bills.
With leasing, you can swerve a lot of those risks. You don’t have to either dip into your savings, or take out a loan, to afford a big lump sum and you won’t end up in potential negative equity because of depreciation.
You instead pay an affordable monthly amount, you’re protected by the manufacturer’s warranty, you get free breakdown cover, your road tax is paid for throughout your lease agreement and you can also take out an optional servicing and maintenance plan which covers things like replacing worn tyres.
Overall, the leasing ethos is that you get motoring peace of mind as something of a one-stop shop.
How much does car leasing cost?
Leasing costs all depend on a number of different factors - not least the car that you’re choosing.
At the lower end of the scale, small hatchbacks like the Dacia Spring or Hyundai i10 can be leased for less than £170 per month with Select right now*.
The Ford Puma - the UK’s most popular new car in 2024 - can be enjoyed from around £250 per month* while the larger Nissan Qashqai is yours for £225 per month*. Meanwhile more premium hatchbacks like the Audi A3 begin at around £330 per month*.
It might possibly look too good to be true, but it’s not. Brokers like Select have dedicated procurement teams that work with funders and manufacturers to get the best deals and discounts going, and special offers are updated all the time.
Can you lease a used vehicle?
What a lot of motorists might not realise is that you can now also lease a used vehicle.
These cars are what’s known in the trade as ‘re-lease’ vehicles - in that they’ve already been through one or two rounds of leasing with previous customers. The savings when leasing used can be substantial compared with leasing the same model new, and it’s an option worth exploring.
Some important things to consider when leasing
When you lease, you don’t pay a ‘deposit’ that you get back at the end of the agreement.
But what you do pay is something called an ‘initial payment’. It’s a lump sum that goes to the finance company in order to lower your monthly fee, and it’s non-returnable. The size of your initial payment will vary, but you can choose to pay just one month’s rental up front if you wish to (your monthly rental fee will rise accordingly).
Another thing to bear in mind is that the vehicle needs to be maintained and serviced throughout the time you get to enjoy it - something which helps protect its residual value. That responsibility is on you. Again, you might want to add an optional maintenance and servicing plan for that added peace of mind.
The car must also be returned in good condition - as stipulated by the British Vehicle Rental and Leasing Association (BVRLA) ‘Fair Wear and Tear Guidelines’. If there are significant scratches, dents or scuffed alloys, you’ll need to get them rectified before you hand back the car.
And - of course - you can protect your lease vehicle with MotorEasy by taking out insurance products like GAP (Guaranteed Asset Protection), Cosmetic, Alloy, and Tyre.
Any other leasing cons?
You need to stay within your stated annual mileage to avoid additional charges. The annual mileage is totalled over the length of your contract. So, if you’ve stated you’ll cover 5,000 miles per year over a three year contract, as long as you’re below 15,000 when the contract ends, you won’t incur any additional costs.
However, you can chat with the vehicle funder about increasing the annual mileage if you think you are going over. It can work both ways - meaning you can potentially either increase or decrease your annual mileage. It’s called a ‘mileage extension’ or ‘mileage reduction’. It’s typically available as an option once you reach six months into your contract but can’t be renegotiated when there are only six months left on your agreement. Not all funders offer mileage amendments (it is possible with some of the funders that Select Car Leasing works with) and rules are subject to change, so check with your provider carefully.
Early termination when you lease can be expensive - so make sure you’ve chosen the right vehicle for you before you commit.
If you’ve got a very poor credit rating (either as a personal or business customer) you may also find it somewhat more difficult (but not impossible) to find a funder to support your lease.
And remember that unlike other finance options (such as Personal Contract Purchase, or ‘PCP’) there’s no option to keep the vehicle at the end of the lease period by way of a balloon payment.
*Prices include VAT. Credit is Subject to Status, Ts and Cs and Arrangement Fees apply. Excess mileage may apply. Stock levels and prices correct as of 28/03/25.
About Select Car Leasing
Founded in 2004, over the past two decades Select Car Leasing has established itself as the UK's leading independent car leasing and van leasing specialists. Today the company has a total fleet of over 96,000 vehicles on UK roads and more than 300 staff members nationally across 12 locations. Working closely with car manufacturers, major automotive groups and key finance partners, Select Car Leasing offers some of the most competitive leasing rates in the market. The company prides itself on customer satisfaction and has achieved a 5-star 'Excellent' rating on Trustpilot based on more than 40,000 customer reviews and was recently named ‘Most Trusted Independent Car Leasing Company 2024’ in the Corporate Excellence Awards. Select Car Leasing is also at the forefront of vehicle electrification, providing industry-leading rates for fully electric and hybrid vehicles as well as offering plug-in solutions to business and fleet customers.
