Car Leasing FAQs

Car leasing, usually called personal contract hire (PCH) or business contract hire (BCH), is paying a fixed monthly amount to use a car for an agreed period (commonly 2 to 4 years) before returning it. You never own the car: you are paying for its use.

With a lease you simply return the car at the end. With PCP (Personal Contract Purchase) you have the option to buy the car by paying a final 'balloon' payment, or hand it back. Leasing is generally simpler; PCP gives you a route to ownership.

It depends mainly on the car's price and expected depreciation, the deposit or 'initial rental', the contract length and your annual mileage. A bigger initial rental or lower mileage reduces the monthly figure; a shorter term or higher mileage increases it.

Most leases begin with an initial rental, often quoted as a number of months up front (for example 3, 6 or 9 monthly payments). It isn't refundable like a security deposit: it is simply the first, larger payment of the agreement.

Every lease includes an agreed annual mileage. If you exceed it, you typically pay an excess mileage charge per mile at the end of the agreement. Estimating your mileage realistically before you choose a contract can save money.

Lease and finance providers usually run a credit check, and approval isn't guaranteed. Some specialists consider a wider range of circumstances. Because this is general information, always check a provider's own eligibility criteria.

You return the car, which is inspected against 'fair wear and tear' guidelines. You may be charged for damage beyond that and for any excess mileage. You're then free to start a new agreement if you wish.

It's the industry standard (published by the BVRLA) for the acceptable condition of a returned lease car, allowing for normal use. Damage beyond it, such as dents or scuffed alloys, can lead to charges.

Compare the total cost over the whole term, not the monthly figure: add the initial rental, every monthly payment and any fees, then check the mileage allowance and excess mileage charge against how far you really drive.

No. This is an independent information website. We don't sell, arrange, broker or introduce leases, finance or insurance, and we're not regulated by the FCA. We publish guides and tools to help you understand your options before you speak to a provider.