There was once a time when, if you wanted a car, you had to save up and buy it outright with a lump sum.
This was great for many of you who had well-paying jobs and could save plenty each month to go towards this car. However, for others, it was a struggle due to low wages or prioritising money for other aspects of your budget such as a mortgage or child costs. It was a restriction for many.
However, everything has changed. Car manufacturers and dealers now rarely market their cars by the full costs of the vehicle. Instead, they sell you a car by how much you will pay on a monthly basis. This comes in the form of leasing and finance options. These options have opened up the car market and made it easier for drivers to acquire cars.
Car Leasing arriving in the UK
Early in the 1990s, car leasing arrived in the UK. Ford tried it first by introducing Personal Contract Hire, however, it was too expensive to catch on. But it did set a principal and other businesses attempted to find ways of making car leasing cheaper.
Initially, it was big businesses leasing large fleets because it helped lower their budgets. Smaller to medium-sized businesses were excluded and individuals could not afford the costs set by the banks and other vehicle brokers.
Eventually, because the price of buying a car outright become too expensive, car manufacturers and dealerships had brand new cars sitting on their forecourts for six months at a time. This meant a radical change was required. Dealers offered discounts to drivers who purchased these cars on a monthly cost rather than outright.
Rise in popularity
Over the past two decades, our economy has changed. We no longer purchase items and services outright as a norm. Instead, we make purchases on a monthly basis. Think of the likes of Netflix, your gym membership, the buy-now-pay-later accounts like Argos and Very. Paying for services and items on a monthly basis is the norm and this tells the story of how car leasing became popular.
When we moved towards a monthly payment economy, it became clear that it was easier to budget for such items rather than saving up for a long period of time to pay in a single payment. The car industry couldn’t afford to be left behind and focused on marketing car leasing to the masses.
But now that car leasing has increased in popularity, the question of how it all works needs to be answered.
What is car Leasing?
In the most simple of terms, car leasing is the long term rental of a car. However, it is never that simple. Car leasing and finance offers similar deals for drivers