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What is Leasing?
Leasing is an increasingly popular way for people to drive a brand new vehicle.Frequently used by businesses and fleets, personal leases have become a mainstream option for those looking for hassle-free motoring with plenty of flexibility and set monthly payments.
So how does leasing work?
Synergy Car Leasing searches the market for the best prices on the vehicle you require. We do this through our industry-leading partnerships with vehicle manufacturers and finance providers. We focus on providing all of our clients with the very best leasing experience, and all of our products are backed up by our Best Price Guarantee.
Depending on your requirements, you choose the length of the lease, typically two, three or four years, and the initial payment, which is normally the equivalent of at least three monthly payments, for the vehicle you want to lease.
The cost you pay each month for the term of the lease is based on a number of different factors, the main one being the depreciation of the vehicle, and therefore its residual value along with the cost of funding. The depreciation, or residual value, of the vehicle is dependent primarily on the make and model and how many miles per year it has been driven.
Certain vehicles retain their value over time more than others, such as a prestigious brand of car, or cars with limited accessibility to newer models. In addition, a car driven just 10,000 miles a year for three years is going to be worth more at the end of the lease than the same car driven 20,000 miles a year for three years.
To determine the cost of the lease for a specific vehicle, we'll factor in discounts, bulk orders and our growing buying power to ensure we can provide you with the best deals available.
At the end of the lease, simply hand the car back and take delivery of your next brand new lease vehicle.
What are the advantages of leasing a vehicle?
There are many advantages of leasing a vehicle for personal or business use:
- Low initial payments compared to purchasing a vehicle
- Fixed monthly payments throughout the term of the contract, allowing for easy budgeting
- Free UK mainland delivery of your new vehicle
- Manufacturers’ warranties are included
- Road tax is usually included in the monthly cost
- Flexibility on the length of the contract required and the amount paid monthly
- Flexibility on the annual mileage driven each year
- Hassle-free - there is no need to worry about selling your vehicle at the end of the lease
- Maintenance plans, which include all servicing and tyres, can be included within the monthly cost, ensuring complete piece of mind and no additional costs or unexpected bills
- For VAT registered businesses, 50% of the VAT on the finance portion of the lease and 100% of the VAT on the maintenance element of the lease can be reclaimed
Are there any disadvantages to leasing?
If you are concerned about not owning the vehicle from the outset or have a bad credit rating, leasing a vehicle may not be for you. Leasing also enters you into a fixed-term hire agreement, and there are costs to terminate the contract early which can often be expensive. You also need to know what annual mileage you expect to drive, which may be difficult to predict. It is worth contacting us during your lease if you think you are going to go over the mileage limit you have agreed so we can offer further help and advice.
Maintenance contracts
It’s well worth considering a maintenance plan when leasing your new vehicle. Maintenance plans offer a fixed-cost option to ensure your vehicle is maintained to the manufacturer's recommendations during the term of the lease.
Maintenance plans do vary by provider, and depending on your individual requirements, can cover routine servicing, mechanical repairs, tyre replacement and wear and tear, no quibble tyres in the event of a puncture or blowout, breakdown cover and a replacement vehicle in the event of an accident or repair.
The benefits of taking out a maintenance plan on your new vehicle include:
- A fixed monthly cost
- One number to call for all maintenance and repairs
- Great value - our clients benefit from nationally negotiated terms on service costs including discounted labour rates, parts and spares
- An extended mechanical warranty on the vehicle may be applicable if the mileage driven is greater than the mileage covered by the standard vehicle warranty
- Peace of mind knowing you are running the vehicle according to the manufacturer’s recommendations
- No unexpected bills, subject to terms and conditions of the plan
- Any maintenance is carried out by a network of approved repairers across the UK
- Hassle free option throughout the term of the lease
- Particularly beneficial to those driving higher mileages when more maintenance will be required or those who like monthly budgeting and no surprise costs
Are there any disadvantages to taking out a maintenance plan?
If you are a very low mileage driver and have the vehicle on a short-term lease, you will require less servicing as there will be reduced wear and tear on the tyres and vehicle in general. It is therefore worth considering if this is the right option for you, to avoid paying for services and maintenance that are not required. However, to avoid any unexpected costs and for a hassle-free leasing experience, it could still be the option for you.
Opting out of your company car scheme
With the tax on company cars continuing to rise on a yearly basis, and many companies offering attractive cash alternatives so they don’t need to run a fleet, more and more drivers are choosing to opt-out of their company car scheme and lease a brand new vehicle instead.
Advantages to opting out of your company car scheme include:
- No restrictions on the make or model of vehicle, including the option to choose more stylish models and petrol engines which are usually not available through an employer scheme
- Leasing typically offers lower repayments and lower initial payments than taking out a bank loan to buy your own car, and avoids the hassle of having to deal with the depreciation of the vehicle
- Leasing cars are usually fully taxed, and can be leased with a maintenance contract in place to cover maintenance, servicing, tyres and roadside assistance for hassle-free motoring
- If you change employers, you will still have your car and you will not have to return it
- Although you will be taxed on your monthly car allowance, you need to factor in the reimbursement you will receive from your company for any business miles. The Inland Revenue allows 45p per mile for the first 10,000 business miles, then 25p per mile thereafter. If your company pays less than the standard 45p per mile, then you can claim tax relief on the difference. By adding together your monthly car allowance, your mileage allowance and any tax relief the monthly budget to lease a brand new vehicle of your choice may be much more than you realise.
Considerations for opting-out of your company car scheme include:
- The leasing agreement is in your own name, not your company’s name, so you are responsible for ensuring all monthly payments are made
- You are responsible for all servicing and maintenance of the vehicle
Our friendly team will be able to run the calculations to see if we can help you not only save money, but drive a brand new car of your choice at a price to suit your budget.
