Car leasing has, for a number of years now, been extremely popular in the US. According to recent statistics from R.L. Polk, the practice accounted for approximately 19 per cent of all vehicle transactions in the country in 2010. Furthermore, the company found this was a considerable increase compared to the year before, when it made up 13.1 per cent of all deals.

Car leasing

However, in the UK there has historically been less interest in car leasing, with the majority of people choosing to save up for a large deposit and meet the appropriate loan repayments in order to own a motor outright.  But why is it that British motorists aren’t taking advantage of car leasing? And could 2011 be the year that it really takes off in the UK?

What Is Car Leasing?

One of the answers may be that many motorists in Britain just don’t know much about the arrangement.

So, what is it exactly? Well, car leasing simply involves the consumer ‘hiring’ a vehicle by meeting monthly repayments over the course of the contract – usually lasting for between two and four years. At the end of the term, the car is returned to the dealer, leaving the customer free to lease another motor. On the downside you cannot put your private car number plates on a leased car.

The Benefits Of Car Leasing

That all seems clear enough, but why would people choose to do this rather than buy a car? The first reason is that there are a number of financial advantages to car leasing, the biggest being car leasing customers are not affected by value depreciation.

What this means is that you do not have to worry about your return on investment when it comes to selling the car – i.e. the fact you will inevitably receive less money when you sell than what you paid for it originally – because you don’t actually have to sell it.

For car owners, however, this is a very real concern. Figures from the AA show the average car loses around 60 per cent of its value after three years, taking into account mileage, advancements and innovations in other models, and so on. In addition, the actual monthly repayments on a leasing contract are considerably cheaper – typically by between 35 and 55 per cent – than those of a car loan. This is huge benefit, considering the finances of the British public remain seriously affected by the global economic downturn.

What’s more, car leasers are able to avoid the complicated and stressful process of buying and selling a car. Add to that the fact road tax and maintenance and service costs are often included in the contract and you can see how car leasing can be much more convenient.

So, will 2011 be the year that car leasing really blossoms in the UK? It’s obviously too early to tell at the moment, but what is clear is that if more people begin to realise the various benefits of the practice, it will undoubtedly continue to grow in popularity.

We all know that securing car finance can be dependant upon your circumstances. But car finance companies can cater to your individual needs and ensure if finance is possible, it is done properly.

Credit rating is very important, but your circumstances are, too. Students, for example, would never have been able to secure a car finance deal a few years ago, now, though; deals that are bespoke to the individual can be orchestrated, ensuring a successful car finance application. Students can always have their parents down as guarantor, this will allow the student to complete the car finance deal and let the parent’s – who will probably have a better credit rating – secure the deal.

For people who are unemployed, securing a car loan is often a little more difficult. Lenders need to see proof of your ability to repay the instalments on a monthly basis. And when you are unemployed, this can be tricky. However, if you’re a homeowner, that stability may help you on your way. It is best to talk to your lender and see what options are available to you. No matter what your situation, there is always a way forward.

Age can be a big factor, too. Usually, lenders will require the person to be over 18, and generally, the older you are, the more likely it is your finance deal will be approved. But if you are a young ‘en, then don’t despair. Car finance is accessible to all types of people, and just because you’re young doesn’t mean the car of your dreams is unreachable. Don’t be afraid to ask, because whoever you deal with they should be flexible and helpful to ensure they do the up most to secure a finance package that suits you.

This is a guest post by Lee Pickering on behalf of Carfinance247.co.uk.