If you are like me and like to change your car every two or three years then car leasing or contract hire as its known may be a better and much cheaper option than buying your car outright.

Car Leasing is all worked out on residual value (What the car is worth after the initial Hire agreement).

A simple calculation of how much you will pay.

Say you lease a car worth £20,000, at the end of a three year agreement the finance company says the car is worth £10.500 (They work this out at the start of the agreement), you will initially be financed for the £9,500, divide this figure by 38 (which will be the normal three months deposit followed by 35 payments) and you will be looking at around £250 per month for your car opposed to buying the car outright and paying Over £500 per month, of course each finance company’s has its own calculations into residual values hence why the differences in prices for the same vehicles varies so much.

With Car Leasing you are only paying for the part you drive (Same as renting a car but over a longer period).

Additional costs would be road fund license and servicing, when you lease a car the majority of the time road tax is included for the duration of the contract, servicing and insurance will be down to the Hirer although maintenance contracts can be purchased at the start of the lease if you wish, which will cover all servicing and wear tear items such as tyres, exhaust, brakes etc.

Have a look at any contract hire or car leasing website and you will be amazed how much less it is to lease a car compared to purchasing, this will often lead to the customer driving a much better car for less than he would have if he had purchased instead of leasing.

At the end of the agreement Give the car back and start again, you can have a new car every two or three years.