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How does Personal Car Leasing Work?

Everything you need to know about Personal Contract Hire

22nd Dec 2021
5min Read
How does Personal Car Leasing Work?

Since the concept of leasing has hit the mainstream, one of the first questions people ask themselves now is, particularly if they've always owned your cars outright, should I buy or lease a car?

The answer will depend entirely on your personal circumstances.

That said, personal leasing, also known as Personal Contract Hire (PCH), is fast becoming one of the most popular ways for people to drive brand new electric cars, without having to worry about things like depreciation, hefty balloon payments at the end of the term or trying to sell a car at the end. 

Leasing a car for personal use is very similar to business car leasing in that you'll get a brand new car and pay a fixed monthly fee over an agreed length of time – typically between two and four years.

You'll still need to agree and stick to pre-agreed annual mileage and at the end of the agreement, you'll hand the car back and either take out a new contract or find an alternative.

As the names suggest, if you use your car mainly for personal use, you should explore personal car lease deals and if you use your car for business, then you'll look for business car lease deals.


This article breaks down everything you need to know before taking out your next lease agreement.

Thinking of getting yourself personal electric car lease deal? You can either check out our latest special offers or configure for a deal that suits you on our website. If you'd rather speak to somebody directly, just give us a call on 0333 1234 333 and one of our leasing consultants will help you find the perfect car. 

 

What is Personal Contract Hire (PCH) Leasing?

Personal Contract Hire, otherwise known as personal car leasing, is a bit like renting a vehicle for an amount of time, usually between two and four years, with fixed monthly payments.

How much you'll pay for a personal car lease is determined based on how much a car will depreciate (lose its value) over the course of an agreement and then assigning fixed monthly payments to cover that cost over the term of the lease. 

The amount your car will lose its value is worked out by looking at a few key factors:

  • How many miles you'll do each year
  • How long you'll have the car for
  • How much money you put down as a deposit (initial rental)

Your initial deposit will usually be a multiple of the expected monthly rental of the car or van, typically 3, 6, 9 or 12 months.

Important note: Any initial payment you make will be offset against the total price of the lease 

More and more people are choosing to lease their cars because it's one of the most cost-effective methods of driving a brand new car. Electric car and battery technology is evolving all the time, which means most lease customers like to be able to upgrade every few years to get the longest ranges and the latest features.

We explored buying vs. leasing in more detail if you'd like to know more.

The benefits of leasing an electric car

There are many benefits to leasing an electric car rather than buying one outright.

  • Low monthly payments
    Personal car leasing means driving a brand new car is far more affordable than purchasing one outright
  • Fewer maintenance costs
    Because electric cars have far fewer moving parts than traditional petrol or diesel cars, there's less to go wrong.
  • Simple process
    Once your lease comes to an end, you can simply hand back the keys and get another one. You don't need to worry about trying to sell it or whether it'll have lost too much value.
  • MOT savings
    Because your electric car is brand new, it won't need an MOT for the first three years
  • Better for the environment
    Not only is an electric car better for the planet, which can only be a good thing, but it'll also save you money too. That's because you won't get hit with hefty ULEZ charges for driving in congested areas nationwide.
  • Cheaper to 'fill up'`  
    Charging an electric car is far cheaper than fuelling a petrol or diesel equivalent. Want to know more? Take a look at our journey cost calculator or a charging cost and time calculator for more information.

New to electric cars? View all of our guides here

Who can take out a personal car lease?

Anybody who passes our credit checks has a valid UK driving license and is at least 18 years old can take out a personal contract hire lease agreement.

How do I know if leasing a car is right for me?

Personal car leasing makes it easier to drive a brand new car, without having to pay the car’s purchase price upfront. And, because you know at the start of the lease how much your payments are going to be, you can plan that into your household budget.

If you have a regular income, a good credit score and want a new car every few years without the hassle of having to sell it, then leasing is your best option.

However, there might be a few warning signs that suggest leasing isn’t for you. If you have a bad credit history, for example, you might find it hard to find a finance company that will be prepared to underwrite the deal.

If you’re a high-mileage driver, you might also find that the price of the lease can creep up significantly. The more miles you cover, the more wear and tear a car will experience, so you’ll have to pay for that.

 

Do I have to maintain my personal lease car?

Just because you don’t own the car and get to hand it back at the end of the agreement, it doesn’t mean you don’t have to be bothered with looking after the car.

At the end of the deal, your car will be inspected before you return the car. Some normal wear and tear is to be expected, but if there are any bumps or scratches, they will be spotted and you will have to pay for them. The car’s mileage will also be checked, to ensure you haven’t gone over the agreed annual amount.

You should also stick to the manufacturer’s recommended service intervals, to ensure the car is in the best possible condition.

You'll be offered the choice of taking out a maintenance contract at the start of your lease, which will be added to your monthly payments. It won’t be a huge amount, and it does add some extra peace of mind, but you will need to make the decision yourself.

Can you lease a car with a poor credit score?

If you have a poor credit rating, you might find it difficult to get approved for credit and leasing a car through a leasing company. At GRIDSERVE, we'll do everything we can to help you find a car that works for you.

 

Thinking of leasing a new car or van?

We absolutely love anything to do with electric cars. Leasing with GRIDSERVE just makes sense, for so many reasons. Whether it's the amazing deals we have access to, our award-winning nationwide charging network or the 100 trees we plant for each and every car we lease, we live and breathe electric cars and vans.

Take a look at our latest car leasing deals and special offers to grab a limited time offer or find your perfect car to get started.

Prefer to speak to a person? No worries. Our team can help you build a lease agreement based on a mileage allowance that works for you, initial and monthly payments within your budget,  Give us a call on 0333 1234 333 and we'll do it all for you!

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