If you`re in the market for a used car, you may be considering whether to purchase outright or opt for a contract hire or leasing agreement. While purchasing outright may give you more flexibility and ownership, contract hire and leasing can offer its own advantages.
With a contract hire agreement, you`ll essentially be renting the car for a fixed period of time, typically between two and five years. During this time, you`ll make monthly payments and have access to the car, but you won`t own it. At the end of the agreement, you`ll simply return the car and can then choose to take out a new contract on another vehicle.
Leasing agreements work in a similar way, but instead of renting the car, you`ll be paying for the use of it. This means that you`ll make payments based on how much the car depreciates during the time you`re using it. As with contract hire, you won`t own the car, but you`ll have the option to take out a new leasing agreement at the end of the term.
One of the main benefits of contract hire and leasing is that you can often get a newer, more expensive car than you would be able to afford if you were purchasing outright. This is because you`re only paying for the use of the car, rather than its full value. Additionally, the monthly payments are often lower than they would be with a loan or finance agreement, as you`re not paying for the full value of the car.
Another advantage is that you`ll often have the option to include maintenance and servicing in your agreement, which can help you budget for these costs and avoid unexpected expenses.
However, there are also some downsides to consider. For example, you`ll need to keep the car in good condition and within the agreed mileage limit, as any damage or excess mileage will incur additional charges. You`ll also need to make sure you can afford the monthly payments for the full term of the agreement, as ending the agreement early can be costly.
Overall, contract hire and leasing can be a good option for those who want access to a newer, more expensive car without the commitment of purchasing outright. However, it`s important to do your research and weigh up the pros and cons to ensure it`s the right choice for you.