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What is Car Leasing?

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What is Car Leasing?

There are a number of existing ways to get a vehicle, with car leasing often being considered as the most efficient when requiring a brand-new, shiny car. It can be a great way to drive a new car, if you cannot afford a large upfront payment and want to avoid car value depreciation.  However, the question then arises, what is car leasing exactly?

It should be known that car leasing is essentially a long-term rental agreement for a vehicle. You essentially lease a car for a set period of time (usually 1 – 4 years), while making monthly payments. When the car lease is over, you will return the car back to the supplier.  

The following tells you all about car leasing, including – what you need to lease a car, and how to find the best car lease deals in the UK.

How does car leasing work?

Car leases are offered by dealerships, leasing brokers, and lease providers. They’re considered a way for people to drive off in a new car; but without paying the full purchase price upfront. You agree on the time interval (aka the lease period) and the monthly lease payments beforehand.

You can drive the car based on the agreed upon conditions for the lease period. Once it is done, you’ll bring back the vehicle. You can also start a lease deal for a newer car.

Benefits of car leasing

There are many advantages of car leasing that make it a better choice than financing (PCP) or buying a car outright. For starters, leasing a car can be a great option if you don't have a boatload of cash for a down payment.

Plus, when you lease, the monthly payment will likely be cheaper than finance. This is because you're only paying for the car's price depreciation during the lease period, rather than its full value. As a result, many are able to get higher-end cars that they may not be able to normally afford.

Leasing is also an easy option for people who want to drive something new every few years but don’t want to deal with the hassle and expense of selling their old car. Not only is the process super easy, but you also get to drive the car during its best years, i.e., the first two to three.

Warranty protection – Manufacturer’s warranty is included with your lease deals free of charge. Most leases let you drop your car off at the garage for no extra cost if something goes wrong.

Lower maintenance costs – breakdown cover often comes as part of the package (covered under manufactured warranty), servicing sometimes too if you included a maintenance package as part of the agreement.

No MOT required and Road Tax included – New cars do not need a MOT in the first three years of their life. Road Tax included as part of your lease agreement free of charge.

Free Delivery – Vehicles can be delivered straight to your home free of charge (mainland UK).

There are some car lease deals that allow you to end them early, as explained here ending a car lease early.

Personal Contract Hire

You’ll find these three words on many car-leasing sites and many call them a fancier term for ‘car leasing’. Just know that a Personal Contract Hire (PCH) is specifically a leasing opportunity for regular consumers, while a Business Contract Hire (BCH) includes car leasing options for businesses as well.

What you need to lease a car

So, you may be asking, “what do I need to lease a car?”. To make it short and simple, if you want to lease any sort of vehicle, you'll need to have a good credit score. Then, you'll also need to pay for a one-time upfront payment (deposit), the more you pay upfront, the cheaper your monthly payments will be.

Let’s say that there’s a vehicle that you’re interested in leasing. You'll need to visit a dealership that offers leasing options for it. Then, you’ll negotiate the terms of the lease with the dealership. This includes factors such as the lease interval, the annual mileage limit, and the monthly expenses.


If you’re thinking about leasing a car, be sure to do your homework. Read the fine print in the lease agreement, and make sure you understand all the fees and charges. Compare offers from different leasing providers via our innovative leasing comparison to ensure you are getting a good deal.

Find car leasing special offers – Auto Lease Compare

Can’t decide on the perfect car lease deal? Auto Lease Compare makes the selection process a lot easier. Once you’ve picked a car, we’ll show you what the best car leasing options are for it. In this way, you will be able to get lower monthly payments which can save you thousands. Check out our latest car leasing deals.

To know more about why leasing is a better option than buying, see our ultimate leasing guide .

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