As a member of RIBA car leasing can be a good option but you need to consider the potential advantages and disadvantages before deciding what is best for you. Put simply, car leasing has grown in popularity across a wide spectrum of users because it enables you to drive a new car without the long-term commitments of ownership.
Let’s have a look at this subject in a bit more detail.
What is a simple car lease agreement
In essence a car lease is an agreement to lease a new car for a fixed period. Typically, this will vary from two to four years. You are committed to paying a monthly premium for the length of the lease which will normally cover the car depreciation and intertest over the term of the lease.
There are some variations to the simple terms summarised above like PCP (Personal Contract Purchase) which we will detail later in this article.
What are the benefits of car leasing to a member of RIBA
There are many benefits to car leasing which are summarised below:
- New cars on a regular basis- Leasing allows you to change cars at regular intervals since you have none of the ownership issues.
- Low monthly commitments- The monthly payment should be cheaper that financing a car purchase since you are not paying to acquire the car at the end of the lease. You are paying for the depreciation of that car and not paying for eventual ownership.
- No need to be concerned with the car resale- At the end of the lease, the re-sale of the car is not your responsibility. You return the car, and the leasing company handles the disposal.
What are the disadvantages of car leasing to a member of RIBA
There are some potential disadvantages that may apply to you. It is worth spending time to make sure that you have weighed them up.
- Excess Mileage- A car lease will have limit on your annual mileage. If you exceed this mileage, you will be subject to excess mileage charges at the end of the lease. It is worth spending time before you sign a lease to make sure that you have an annual mileage allowance which leaves you with some leeway.
- Other costs- There may be other costs like early termination fees that may be in a car leasing contract, so it is important to understand all the terms you are agreeing to.
- No car modifications- Since you don’t own the car, you can’t modify the car in any way. This is normally not an issue, but it is good to be aware of it.
- Wear and tear- Leased cars must be returned in good condition. Normal wear and tear is allowed for but excessive wear and tear will incur extra fees. This will include things like scratches, worn tyres and damage to seats etc.
What is Personal Contract Purchase
Personal Contract Purchase is very similar to Car Leasing described above.
With PCP the lease arrangement is broadly the same, but you have the option to buy the car at the end of the contract term. Normally the car price has been agreed in advance and you will have a to make a ‘balloon payment’ to acquire the car.
PCP may be a better option to car leasing if you want to acquire the car at the end of the lease.
Take advice at an early stage on car leasing of PCP
“We at Tyson Cooper have been running the RIBA Vehicle Programme for the Royal Institute of British Architects since early 2018” ( Source: Tyson Cooper) so please get in touch if you want to know more.
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