What is Car Leasing?

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Car leasing, also known as personal contract hire (PCH), is a way to drive a brand-new car without the high ownership costs.

How does leasing a car work? It’s like a prolonged rental agreement where you make an initial deposit and then pay fixed monthly payments for two to four years. It is possible to lease for a shorter period, but this is dependent on the leasing company. When the lease ends, you can return the car to the leasing company without worrying about selling it or its depreciation. The process is simple and hassle-free.

Representative Example: Borrow £6,000 with £1,000 deposit over 48 months with a representative APR of 17.9%, monthly payment would be £171.83, with a total cost of credit of £2,247.84 and a total amount payable of £9,247.84. CarMoney Limited can introduce you to a limited number of finance providers based on your credit rating and we will receive a commission for such introductions this can either be a % of the amount borrowed or a flat fee. This does not influence the interest rate you’re offered in any way. CarMoney is a broker not a lender



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  • New car— Car leasing provides the opportunity to regularly experience a new car equipped with the latest features and technology. By opting for car lease deals, you can relish the advantages of driving a brand-new vehicle without needing a long-term ownership commitment.
  • Lower maintenance costs—Leased vehicles often have a warranty throughout the lease period, leading to lower repair costs than owning a car outright.
  • Flexible – Leasing provides flexibility when the lease term is up. You can return the vehicle and lease a new one, purchase the leased car at its residual value, or simply end the agreement.
  • Lower monthly payments—Lease payments are generally less expensive than loan payments when acquiring a new car. This is because you are solely responsible for covering the vehicle’s depreciation during the lease period rather than the entire purchase cost.


  • Mileage restrictions – Lease agreements can come with mileage restrictions that limit the number of miles you can drive within a specific timeframe. If you exceed these limits, you may have to pay extra charges at the end of your lease term.
  • Don’t own the vehicle – One major disadvantage of leasing is the lack of ownership of the vehicle once the lease term ends.
  • No equity—As the leased car is not owned by you; there is no opportunity to accumulate equity over time, resulting in no trade-in value when upgrading to a new car.
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How does car leasing / PCH differ from PCP?

Car leasing is a widely used method of obtaining a vehicle without purchasing it outright. This method is also known as Personal Contract Hire (PCH) and Personal Contract Purchase (PCP), which have notable differences. When you opt for a PCP, you bear the risk of depreciation if you decide to purchase the car at the end of the agreement. This means that the car’s value may have decreased over time, and you may end up paying more than the car is worth.

On the other hand, with PCH, the leasing company takes on the risk of depreciation because they own the vehicle for the entire lease period. This means you can enjoy driving the car without worrying about its value decreasing over time.

Frequently Asked Questions

Is it better to lease or buy a car?

It depends on your financial state. Each has many pros and cons, so it is essential to research what suits your current requirements.

Does car leasing include insurance?

Whether insurance is included or not depends on the leasing company and the lease agreement terms. Typically, only warranty is included in the monthly price, not insurance. Do your research before committing to personal car leasing agreements to ensure you know what is included.

Can you lease a car with bad credit?

It will be more challenging, but leasing a car with bad credit is possible. You may incur higher costs than someone with good credit or require someone to co-sign the agreement.

Can you put a private plate on a leased car?

Permission from the leasing company is required to put a private plate on the vehicle since it belongs to them, and any modifications also need approval from them.

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CarMoney LIMITED is authorised and regulated by the Financial Conduct Authority (FCA) for consumer credit activity and our registration number is 674094. Representative 17.9% APR. Over 18’s only. CarMoney IS A BROKER NOT A LENDER.

REGISTERED ADDRESS: Pioneer House, 2 Renshaw PL, Motherwell, ML1 4UF, Scotland.Company Number: SC467274.

All finance is subject to status and income. Written Quotation on request. CarMoney Limited can introduce you to a limited number of finance providers based on your credit rating and we will receive a commission for such introductions.