Young driver car lease deals allow you to drive a brand new car with lower payments than other vehicle finance. With new driver car deals at the end of the contract, you return the keys take out another one
How do car lease deals work?
Car lease deals (PCP) are becoming very popular with both young and new drivers:
- The contract is for a fixed amount of time.
- At the end of the rental period, you return the vehicle to the leasing company.
- Monthly repayments for a car lease are less than for other new driver car deals.
- No worry about the car losing value or having to sell it when the agreement ends.
The lease period is from 12 to 36 months with a deposit equivalent to three months payments.
The car leasing company will own the vehicle, but for the duration of the lease, you are responsible for insurance and maintaining the car.
Pros of a car lease
- You can drive a new car at low fixed costs.
- No need to worry about resale value, warranties, vehicle tax, and maintenance.
- Lower deposit and monthly repayments than with other types of car finance.
- Unless you opt out, your lease agreement will be regulated which means you have certain legal rights and protections.
Cons of new driver car deal
- You won’t own the vehicle.
- If you lease a car with high depreciation, you could be well out of pocket.
- If you don’t include service in the contract, it could turn out expensive if the car was not up to standard when returned.
What are the repayments options for a car leasing deal?
The monthly repayments on new driver deals lease should be less, on a like for like basis, than for other forms of car finance.
The value of the car you lease will affect the monthly repayments and any deposit required. One way of reducing the costs is to choose a vehicle with a lower depreciation value.
The amount of the repayments will also be affected by:
- The contract period – the number of months you lease the car.
- The estimated mileage – the number of miles you expect to drive over the contract.
The amount of a car lease deposit varies.
- No Deposit car lease deals will push up the amount of the monthly rental.
- Deposit required lease deal – the deposit will vary between three and six months of the monthly rental payment.
What happens at the end of the lease period?
It’s quite easy when the lease period ends you and back the keys and walk away or take out a new car lease agreement.
If you exceed the estimated mileage, or the car has damage, there will be a charge.
- Distance is limited to about 10,000 miles a year, and you will be charged excess mileage if you go over this.
- You will need to pay for any wear and tear above what is deemed to be “reasonable condition”.
How about servicing on a car lease?
VAT on car lease deals
Be aware of paying a large deposit on a car lease
Initial payments on car lease deals are flexible, and you may decide to pay more as a deposit than required:
- While making a large deposit will reduce the monthly repayments if you are in an accident, and the car was a write-off. You would not receive back any payments made.
- Your insurance would pay the price of the vehicle but the initial rental amount made will not be repaid, and you would be out of pocket with no car.
If you take out car lease finance, do consider the pros and cons of the size of your deposit.