Car leasing: What happens at the end?

What happens at the end of your car leasing contract? Car leasing experts, Lease4Less, take a look at what happens at the end of your contract and break it down into a simple guide.

A question we usually get asked is what happens at the end of my car leasing contract? Well that all depends on what type of contract you have opted for. We delve into the dreaded ‘end of contract’ to let you know what happens, what to avoid and squash some common myths regarding the end of your car leasing contract.

What is car leasing?

First of all, let me start by giving you a bit of an insight as to what car leasing is. ‘Car leasing’ is quite a broad term in all honesty, but it’s basically an alternative method of financing your car.

Car leasing is broken down into different methods of finance:

Contract Hire: Usually the most popular and is often the main term used when referring to car leasing.This agreement allows a driver to drive a vehicle for a set period of time, but the driver will never actually own the vehicle. Typically, a monthly rental plan is set up for the length of the contract, on completion of which the vehicle is returned to the hire company.

Personal Contract Hire: is fundamentally equal to ordinary contract hire but it is only available to private individuals. This represents the most common form of leasing and is what most people refer to as ‘car leasing.’ With a PCH agreement the customer takes control of a vehicle for a set period of time, but never actually owns the vehicle outright. Instead, once the fixed monthly payment plan has been completed and the contract comes to an end, the customer simply returns the vehicle to the leasing company. Alternatively, you can also take out a fresh personal contract hire lease.

Personal Contract Purchase: or PCP, works on the same premises as PCH (personal contract hire) but with a significant difference. On completion of the deal, there is a voluntary balloon payment you can choose to fulfil in order to take full possession of the vehicle. The amount payable is established at the outset and will allow drivers to keep their vehicle if they wish to do so. This option is not mandatory; drivers also have the option to return their vehicle to the leasing company.

These are three of the most popular methods of car leasing. Although it’s worth noting that there are different methods of car leasing and car finance, it’s also worth noting that every method has it’s pros and cons any may not be the right method for you.