Car leasing: Your questions answered

Car leasing can be a great way to get hold of a new car, but it's far from simple. Here we answer some frequently asked questions about leasing a car for the first time to help you with any queries you may have.

Do lease cars need an MOT test?

An annual MOT test is required on any car after it turns three years old. Therefore, unless your lease term exceeds three years, you will not need to obtain a MOT test certificate.

Do lease cars come with insurance?

No. Every customer is different, so it is impossible to include insurance in with the lease price. All lease cars must be insured comprehensively by the person leasing the vehicle.

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Can you explain 3+23 for a two-year contract or 3+35 on a three-year car leasing agreement?

Car leasing deals are usually calculated over a two- or three-year term. Deals are advertised as 3+23 or 3+35 contracts. The '3' represents an initial payment equivalent to 3 monthly payments, then +23 or +35 represents the number of payments you will pay throughout the contract term.

You will also see deals advertised for comparison on different payments profiles, for example 6+23 and 6+35; some customers prefer to pay a higher payment at the front of the lease, which in turn reduces the monthly rental amount for the balance of the contract.

Who owns the car?

On both 'business contract hire' and 'personal contract hire' the finance company is the legal owner of the car on the V5 document. The finance company the lease is taken out with will record the customer/business as the keeper of the vehicle on its internal records for the lease term.

What happens if I exceed the annual mileage on the lease contract?

Every lease car contract includes an 'excess mileage' charge, therefore should you exceed the agreed total mileage in your contract, any additional mileage will be charged at this rate. For example, if your excess-mileage rate is 5p per mile, an extra 1000 miles will cost you £50.00 + VAT. The finance company will invoice you after your lease car is returned.

Are all lease cars brand new with no previous owners?

Most car leasing offers are calculated on brand new cars, however some finance companies will process leasing contracts on cars up to 12 months old.

Is road tax included in the car leasing price?

Road tax (VED) is included for the full contract duration of most deals. Please check the details associated with your deal of interest to ensure this is the case.

Are lease cars covered by any form of warranty?

All new lease cars come with the standard manufacturer warranty supplied at main dealer level.

What is maintenance?

You can opt to include what is called a 'maintenance package' in with the price of your lease. This generally covers you for your annual car service and any wear-and-tear items that need replacing (excluding damage). Check the full content of the package with the supplying dealer, because some maintenance packages may exclude tyres and/or exhausts.

Are there any administration fees?

Some finance companies or dealerships may charge an administration or document fee. Please check your quotation paperwork and ask your main dealer contact if you are unsure.

Is delivery included in the leasing price?

The majority of car leasing deals include delivery to a UK mainland address of your choice. You can verify this with your main dealer contact or your leasing company.

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