Leasing - a simple explanation for a muppet

ultralaser · 3 Feb 2017 at 21:16

Hi.

I've never resorted to leasing a car before, and to be totally honest my awareness of leasing is close to zero. So I'm looking for the collective wisdom of OCUK to help me before I look at leasing.

What's the deal with the deposit?

Now call me an idiot but when I read "deposit" I believe that means that at the end of whatever contract it is you have with a motor company, you'd be getting that deposit back. But it seems a that isn't the case with leasing a car and many companies call them "initial rental" payments which essentially as best as I can understand isn't a deposit and is just a large payment you make upfront with is non-refundable and you won't get it back (so that begs the question why don't they just roll that into the monthly payments and have done with it???"

What's included and what isn't?

For some reason they all have road tax included (why I don't know). Some offer first year free insurance (again no idea why). None seem to offer servicing for the term of the lease (#wtf?). What exactly can you expect to have with a lease car apart form the bare metal?

"Gap" Insurance..... baby jesus wept.
So my baseline reading of the interwebz tells me that gap insurance helps bridge a divide between what I would pay for insurance normally (which is stupidly expensive) and what I'd need to repay the motor company I leased from incase of an accident. This makes my mind boggle a little, WHY doesn't the insurance I'd be paying for cover this anyway? I just don't understand....

I don't really get it, why I can't walk into a show room, walk out with a car that I pay a base monthly payment, and for that is serviced, insured, taxed, and at the end of a lease if I don't like it I either hand it back or pay for it. It seems simple to me so why do the motor companies make it so hard? Or am I missing something? :confused:

ultralaser · 3 Feb 2017 at 21:24

[TW]Fox;30469012 said:
You get none of the money back, the deposit is not returned.

Tax is always included but tyres and servicing are rarely included and insurance almost never is.

Thanks, so it's not a deposit. Tax is included (but we still have no idea why). Serving and insurance sometimes is (but we have no idea why). That's at least some clarity!

ultralaser · 3 Feb 2017 at 21:25

SDK^ said:
The term 'deposit' is never used - it's an initial payment / initial rental.

It might be that it's used on car forums / HUKD etc.

EDIT: Even so then why not add it to the monthly charge?

ultralaser · 3 Feb 2017 at 21:30

SDK^ said:
Also - road tax hasn't been used for many years - It's Vehicle Excise Duty (VED)

You just need to use the correct terms then the definition and reason become obvious.

Thanks that is helpful, maybe I'm a bit old school thinking / calling it road tax.

ultralaser · 3 Feb 2017 at 21:36

SDK^ said:
You can get these deals where everything is included (except fuel). But, you pay a premium for the convenience, so they are never value for money.

Could you link me to a few examples (not doubting they exist but just havent seem them personally)

ultralaser · 3 Feb 2017 at 21:48

Pretty open minded to be honest, considering an Ateca (1.4) maybe a Octavia at the moment. I have a pretty open budget £150-325 PCM.

ultralaser · 3 Feb 2017 at 21:57

Scottland said:
Regarding the initial payment (aka initial rental, deposit). Take a step back a second and think of it this way, the overall cost of the lease is £8000 over 24 months. You could pay it in 24 even amounts, this would be referred to as 1+23. Or you could pay 9 months up front and 23 following payments at a lower amount per month - a 9+23. But the total cost would be the same.

A lot of companies will offer maintenance at an additional fee, but generally all your get would be VED (road tax) included.

It's also worth noting that many leasing agents/brokers will charge an admin fee which is not included in the rental price. So it could have an initial rental of £800 and 23 payments of £90 a month. But the lease I got agent might also want £500 in admin fees.

Another catch with leasing is extras on the spec of the vehicle. In most/all cases you'll pay the amount the extra costs / the term of the lease. So, say you wanted to add metallic paint at £550. On a 2 year lease it will cost an additional £23 a month.

Really useful thanks. I didn't know about the admin fees :eek: