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There is no doubt that when buying your personal car there are various difficult decisions to make. With the growth of car leasing in Great Britain, the way you finance your car has never been more of a prominent concern.

Irrespective of what method you opt for, it is going to be an expensive expenditure on your part therefore it’s important to understand all the choices open to you before you can determine which is best.

In a nutshell, personal car leasing means you pay an upfront cost, normally 3 months payment, and then a periodic sum to drive your car for the full term of the lease, in the main lasting between 2 and 4 years. The most significant thing to note is that at no point do you actually own the car. At the finish of the term you the car and take out a lease on a brand new car, though there will often be the alternative to buy the vehicle outright.

The monthly payments are forecast based on the residual value – this is the price of the new car minus the forecast cost of the car after the term of your lease. So, if you look to lease a car that is well known for holding it’s residual value, such as a Volkswagen or BMW your payments will probably be less than cars which are known to depreciate quickly.

This is the key advantage of personal car leasing – if you were to buy outright your car would start to lose value as soon as you start the car for the first time, whereas if you lease, this is not your worry.

Other advantages include:

• Lower monthly payments than taking out a loan
• Lower down payment at the commencement of the lease
• More options in terms of cars available for you to choose from
• More choice – after the term, you can get a new car, buy the car or just walk off.

There are some downpoints to contract hire, such as:

• You do not own the car
• Other charges maybe incurred based on annual mileage
• Insurance – you will have to take out a comprehensive car policy and consider additional cover, such as gap insurance to cover any possible shortfall in payments.