Car leasing
Drive a brand-new car for a fixed monthly fee — no big upfront cost and no resale worries.
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Leasing (also called Personal Contract Hire) is essentially a long-term rental. You pay an initial payment followed by fixed monthly payments to drive a brand-new car for an agreed term and mileage. At the end you simply hand it back and pick your next one. With optional maintenance packages, leasing can be one of the most hassle-free ways to always drive something new.
Best for
- Drivers who always want the latest model
- People who don't want to own or sell a car
- Anyone wanting predictable, all-in motoring costs
- Drivers with steady, predictable annual mileage
Pros
- Always drive a brand-new car
- Fixed monthly costs with optional maintenance
- No depreciation or resale worries
- Lower initial outlay than buying
Things to consider
- You never own the car
- Mileage limits with excess charges
- Early termination can be costly
How car leasing works
Pick your car
Choose your make, model and spec from a brand-new range.
Add maintenance
Optionally include servicing and maintenance for true peace of mind.
Hand it back
Return the car at the end and lease your next one.
In short
A personal lease is a long-term rental. You pay an initial payment followed by fixed monthly rentals for an agreed term and mileage, then hand the car back. You never own it, there is no balloon payment, and the leasing company carries the entire risk of what the car is worth at the end.
- Typical initial payment
- 3, 6 or 9 monthly rentals
- Typical term
- 24 – 48 months
- Ownership
- None — the car goes back
- Mileage
- Agreed up front; excess is charged
How does personal leasing actually work?
- 1
Choose the car, term and mileage
Rentals are priced from the car's expected depreciation over the term at the mileage you select.
- 2
Pay the initial rental
Usually expressed as a multiple of the monthly figure — commonly three, six or nine months up front.
- 3
Pay fixed monthly rentals
The amount never changes. Road tax is normally included for the duration.
- 4
Hand the car back
At the end you return it, subject to the mileage allowance and fair wear and tear.
Because you are only paying for the depreciation and interest rather than the whole car, monthly rentals on a lease are usually lower than hire purchase on the same vehicle. That is the trade: a lower payment in exchange for having nothing at the end.
Leasing vs PCP vs hire purchase — which is right?
| Personal lease | PCP | Hire purchase | |
|---|---|---|---|
| Monthly payment | Lowest of the three | Low | Highest |
| Own the car at the end | No | Optional, via the balloon | Yes |
| Mileage limit | Yes | Yes | No |
| Road tax included | Usually | No | No |
| Can you sell it early? | No — early termination applies | Yes, settle and sell | Yes, settle and sell |
| Best for | Predictable costs, changing car regularly | Flexibility at the end | Long-term keepers |
Illustrative comparison. Individual agreements vary — always read the documentation.
The clearest way to choose is to ask what you will want to do in three years. If the honest answer is that you will hand the car back and take another one, a lease removes the resale problem entirely and usually costs less each month for doing so. If there is a real chance you will want to keep the car, PCP preserves that choice and hire purchase guarantees it.
What does 'fair wear and tear' mean at the end?
Every lease is returned against an industry fair wear and tear standard. It allows for reasonable use — light scuffs, small stone chips, normal interior wear — but not damage. The most common charges are for kerbed alloys, dents larger than the permitted size, windscreen chips and missing service history.
- Keep the service book stamped and on schedule at a franchised or approved garage.
- Repair alloy kerbing and small dents before the return inspection — independent repairers are usually cheaper than the end-of-lease charge.
- Replace tyres that are near the limit, and make sure they match the required specification.
- Keep all keys, the locking wheel nut and any accessories that came with the car.
- Photograph the car thoroughly on collection day as your own record of its condition.
Who is leasing genuinely good for?
Leasing suits people who value certainty and hate admin. You know the monthly cost, road tax is handled, the car is under manufacturer warranty for the whole term, and at the end you hand back the keys with no resale negotiation and no exposure to a falling used-car market.
| Leasing works well if | Leasing works badly if |
|---|---|
| Your annual mileage is stable and predictable | Your mileage varies a lot year to year |
| You want a new car every two to four years | You like to keep cars for a decade |
| You'd rather not deal with selling a car | You want equity or an asset at the end |
| You can cover the initial rental comfortably | Your circumstances might change mid-term |
| You keep cars in good condition | The car will carry heavy work or family wear |
Common mistakes to avoid
Understating annual mileage to get a lower rental
Contract for the mileage you'll actually do. Excess charges at the end typically outweigh the monthly saving.
Comparing a lease rental with a PCP payment as if they're the same
The lease has no end-of-term option and often includes road tax. Compare total cost over the term, not headline monthlies.
Leaving damage until the return inspection
Fix kerbed wheels and small dents in advance. Independent repair is usually cheaper than the end-of-lease charge.
Leasing when your circumstances might change
Early termination is expensive. If there's real uncertainty, a product you can settle and sell is safer.
Sources and review
- Financial Conduct Authority — Car finance — consumer information
- GOV.UK — Vehicle tax rates
Last reviewed 5 August 2026 by the WeCarFinance editorial team. Figures on this page are illustrative and are not a personalised quote.
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