When it comes to getting a new car, it can be an expensive ordeal. On car finance, you usually have to put down a deposit, which can range from the substantial to the proportionally huge amounts. This is followed by high monthly payments and at the end, you have to pay an extra balloon payment to take ownership of the vehicle. Then you have the continuing issue of depreciation that has already ravaged your car. But there is another way.
You can get car leasing and you aren’t required to pay a deposit for it.
You don’t need a deposit
For many of us, the requirement of a deposit for car finance is off-putting. We don’t all have that much spare cash lying around and it is possible that our current vehicles have depreciated so much as to not be worth the amount required for a deposit. But we do need a new car either because it is our first car after passing our driving test or our current vehicle is falling apart.
But if you don’t have the money, no need to despair. Car leasing
But what about car leasing?
When you get a car through car finance, in most cases, you end up having to pay more to take ownership of the car through a Guaranteed Minimum Future Value payment (balloon payment). You are then haunted by depreciation. In fact, the whole point of a balloon payment is to calculate how much the car will have depreciated by the end of the agreement and then charge you to the remaining value of the car.
Car leasing removes all that hassle for you. Through a Contract Hire agreement, which is car leasing in its purest form, you lease the car for a period of time, paying monthly amounts and then you simply hand the car back and move on. It is the easiest way of getting a car without having to worry about depreciation or the hassle of keeping the car.
Combine the fact that you simply hand the car back with not needing to pay a deposit, you can get a car quickly without it breaking your bank account either in the beginning or at the end of the leasing agreement.
There is a catch
Like with most things, there is a catch to no deposit car leasing. Whilst car leasing does offer lower monthly payments than car finance agreements in general, opting to not pay a deposit will raise your monthly payments.
With both car leasing and car finance, if you place a deposit, your monthly payments will be lowered. The higher the deposit, the lower the payments. However, your monthly payments will almost always be lower on car leasing than on car finance either way.