People want cars. They need cars to commute to work, do the weekly shop and much more. In fact, 2015 saw the highest number of newly registered cars in thirteen years. And yet fewer people are buying cars outright with cash. Why? Because people have discovered car leasing and they are loving it.
But why have people moved to leasing from buying those cars outright?
Years ago, marketing departments would make you aware of cars for sale by telling you the full price of a car. For example, you’d see a poster of a Ford Fiesta which was available for £12,850. Nowadays, it is very rare you will see an advertisement like that. It is far more likely that you will see one that says you can get a Ford Fiesta from £*** a month. This change in campaigns has raised the awareness of car leasing agreements.
Why has this change occurred?
The change in marketing and the rise in awareness has come around because people’s financial capabilities and spending habits have changed dramatically from just a few decades ago. People are going through a financial squeeze currently and having large amounts of spare cash on hand to buy cars outright is rarer than it used to be.
The economy has changed and with the likes of Netflix and other forms of subscription, it has become common for people to pay for things on a monthly basis instead of all at once. This is what leasing brings to the car market.
It has allowed people to pay for cars on a monthly basis through Personal Contract Hire (PCH) and Personal Contract Purchase (PCP) agreements. These agreements work by you placing a deposit down, followed by a series of monthly payments for the rest of the agreement. Under a PCP deal, you have the option to pay a balloon payment to take ownership of the vehicle or with both agreements, you can also just hand the car back to the lender.
Because you are able to hand the car back instead of taking ownership, customers are able to avoid the curse of depreciation that causes many of us so much hassle. Instead of having to find buyers for a car that’s lost much of its original value, you can simply hand the car back and start afresh.
Leasing attracts Millennials
Study after study shows that Millennials are less inclined to own car than the generations that came before them. Millennials value having access to a car rather than owning their own car. The car isn’t the status symbol it once was in the eyes of the Millennials. However, that doesn’t mean they don’t want a car. Instead of buying a car to own it, more and more Millennials are leasing cars to drive them.
Millennials are the generation that pays for things on a monthly basis more than any other because it is easier for them to budget that and it is quicker to acquire things like cars without trying to save up for years. They can ring up, apply online or simply walk into a dealership and drive away with a car by paying monthly amounts.
Brand new cars for cheap prices
One of the best aspects of leasing is you can return the car at the end of the agreement. This dramatically lowers the price of a car because you are only paying to cover the depreciation loss over the length of the agreement rather than the entire value of the car. This lowers the monthly payments meaning people are able to get brand new cars for lower monthly costs with leasing than with other options available.
Car leasing is booming in popularity and only getting bigger. Hippo Leasing offers great deals for you to lease cars that will suit your needs. Browse our great collection, find a car that suits your requirements and our team will find you a deal to match.