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Leasing A Car Explained

By: Chris Nickson - Updated: 16 Nov 2017 | comments*Discuss
 
Consumer Rights Vehicle Leasing

Many people buy their cars, either hire purchase or with cash. But there's also the option to lease a vehicle. This happens more with businesses that offer company cars to employees. But car leasing can also seem like an attractive option for individuals, since it requires no deposit - however, you will be asked to pay a fee generally equal to the first three months' rental.

Types Of Lease

An operating lease, or contract hire, means that the car is hired for a fixed period (between 18-60 months), and a fixed rental is paid, based on the anticipated mileage to be used. It can come with or without a maintenance agreement. At the end of the lease the vehicle is returned to the finance company, which re-sells it. As much as 100% of the cost of rental can be offset against taxable profits and up to 100% of VAT on the leased car can be reclaimed, depending on the situation.

Under a finance lease, the leasee takes responsibility for selling the vehicle at the end of the lease period to settle a pre-agreed residual payment. A payment equivalent to the estimated future value is payable at the end of the contract. At the end of the contract period, the vehicle is sold and if the sale amount exceeds the residual payment, the lessee keeps the difference.

There's also lease purchase, under which the lessee owns the vehicle after all payments, including the option to purchase payment at the end, are made. Lease purchase is a cheaper monthly alternative to hire purchase, the traditional method of financing, and is written on a hire purchase agreement with the protections afforded by the Consumer Credit Act. A personal lease has a residual payment incorporated into the lease. If the lessee pays it, he owns the vehicle. Alternatively, it can simply be returned to the finance company.

Your Responsibilities

When you lease a car, you're entering into a contract. That gives you certain responsibilities to take care of the car and return it in a certain condition - as with any contract you should read the small print. Different lease companies set different conditions, so sit down with your contract and read through it carefully.

You'll also need to have your car serviced at regular intervals at a franchised dealer or approved servicing agent, usually every 12,000 miles, or as specified by the manufacturer or leasing company. Unless you have a maintenance agreement on your lease, you'll need to arrange and pay for this yourself.

You'll be responsible for obtaining insurance on the car, and (depending on the type of lease) keeping up the road fund tax.

Returning the Car

You need to be very aware that the car must be returned in good condition, with an allowance for fair wear and tear. The finance company will have the vehicle inspected, and you'll be assessed a charge for excess wear and tear as shown under the guidelines of the BVRLA - British Vehicle Rental and Leasing Association. Charges are most often assessed for:
  • rips, stains, burns and tears on seats.
  • damaged or scratched paintwork.
  • bodywork chips and dents.
  • damaged wheels and trims.
The bill can come as an unpleasant surprise, so about five weeks prior to returning the car; you should begin your preparations, fixing any damage, including cracked windscreens. Gather together all the keys and documentation that came with the car. If you've fitted any non-standard equipment (which should only be done with permission) it should be removed before returning the car.

Problems

If there's damage or any other problem with your car which is due to a manufacturing or design fault, then this issue is between you and the dealership, and it's your responsibility to deal with any issue before you return the car to the lease company, and ideally at the point when you notice the fault. Manufacturing and design faults can include such things as corrosion and tarnishing of exterior trim and fittings, paint or coatings peeling or falling off.

In the event of a problem between you and the leasing company that can't be resolved, you can contact the BVRLA (if the company is a member) and fill out a complaint form on their web site. They'll write to both parties to resolve the complaint. If that doesn't work, they'll forward the relevant details to a conciliation committee. You'll hear a decision within 30 working days. Using their conciliation service doesn't preclude your right to take separate action.

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I have had my fuel and go lease car 18 months.2 months ago the heating went. I booked it in for mtce with the dealership. It was collected from my home no warning lights, no temp increase driving well. First diagnosis leaking coolant further investigation required. Told unless it's a warranty issue I can't have a temp. After the weekend the story changed there was no coolant, no radiator cap and needs a new engine and so non warranty. I've never been under the bonnet last time anyone was it was at service 7 months ago or 10k ago had the radiator cap been off it would have blown up. Lease company and dealership are arguing and I'm sat here carless. A report has been independently commissioned to establish if a warning light has been on and gone off or I've ignored it and if it's on now when, I know I've not seen a light and had there been one surely the mechanic who collected it wouldn't of driven it, I hope the report clears it up And shows the dealership to be the rogues I suspect they are I don't know why it won't but I'm worried sick and don't know my rights
Debz - 20-Sep-17 @ 9:51 PM
davidce - Your Question:
I have a Car on Lease for 18months, It has been in and out of the garage since. The latest issue has resulted in the car being in the garage for 6weeks, without a known resolution.At what point can I say I don;t want it back.The car I have been given is not similar in lease cost and is not the same fuel type.Technically I am paying full price for a leased car and actually getting a car that is £117 cheaper to run.What are my consumer rights?I have spoken to the lease company and they are failing to engage with me. The Lease is with the manufacturer direct.

Our Response:
How long is it since you took out the lease? If it's less than 6 months you can demand a replacement or refund (for what you've paid so far less depreciation etc) as you've allowed them garage sufficient time to try and resolve the issue.
ConsumerRightsExpert - 7-Sep-17 @ 11:31 AM
I have a Car on Lease for 18months, It has been in and out of the garage since. The latest issue has resulted in the car being in the garage for 6weeks, without a known resolution. At what point can I say I don;t want it back. The car I have been given is not similar in lease cost and is not the same fuel type. Technically I am paying full price for a leased car and actually getting a car that is £117 cheaper to run. What are my consumer rights? I have spoken to the lease company and they are failing to engage with me. The Lease is with the manufacturer direct.
davidce - 5-Sep-17 @ 3:47 PM
I have a (3rd party?) contract hire vehicle on a two year contact but the company I leased it thru and have been paying have not been making payments to the company they lease it from as fleet hire. Do I have any rights as the person who claims to be the owner is demanding the vehicle back immediately even though I only received notification through the post today.
Helen - 18-May-17 @ 8:51 PM
Hi, I've had a Skoda Octavia on personal lease, I use the car for work as well as vomiting. I have a full service and maintenance contract and I've kept the car serviced for the time it's been under my care (2 years). This week the car started to overheat, something to do with the water pump and a sleeve that fits over the impeller which heats the car up quicker, the sleeve can become stuck which is a common fault. I called the Driverline service which I get access too that includes recovery etc with the AA. The technician came out really quick and confirmed he above, he followed me to the nearest dealer and then took me back to work, the dealer didn't have a loan vehicle the tech confirmed that I am entitled under the terms of my lease to get a 48 hour relief car. When we got back to my office he called his office the get the ball rolling. This is when it started to go wrong, long story short, despite me chasing etc and promises of taxi's if a car was not available I was left stranded without transport at work, luckily a colleague was able to give me a lift. This morning a taxi booked by driverline took me to work it was confirmed at 9:30 that a car would be delivered before 13:00. Car again did not materialise, was told that it never existed by the hire company and that no other car was available. I booked a car that I could collect from said hire company that afternoon and have e-mail confirmations that they could in fact supply a hire car. A taxi was again apparently booked to take me home, no taxi arrived, my boss kindly took pity on me and let me borrow a company van. I've lost all trust and confidence for them to keep me on the road when it really counts, I had to cancel a meeting with a potential customer due to not having a vehicle. I travel all over the country for my work, what if something happens when I'm not a taxi journey away from home because they haven't proven themselves very effective at executing that part of the contract. Can I end the lease based on this?
SteveVRS - 24-Jan-17 @ 8:55 PM
Rob - Your Question:
I have a 2016 Kia Sportage on lease and around 4 months ago had a problem where the dashboard lit up more or less every available fault light then the steering was lost. Car went in and was repaired after several weeks of investigstion. Last week the same situation only this time was being driven by my partner with my 8 month old daughter in the rear and steering was lost at 70MPH on the motorway and was stuck in a live lane! My partner has vowed she will never drive it again and I want rid of it! Kia customer service have been some of the worst I've ever experienced. The car is currently in the garage however I dont want it back and just want to end the lease. I want nothing more to do with Kia or the vehicle. What are my consumer rights in this situation?

Our Response:
In general your consumer rights when you buy a car state that you are entitled to a repair or replacement within the first 6 months (but the retailer can choose which option). With a lease car you should contact the lease company and ask them what they propose to do about it. It might be worth seeking the advice of a lawyer here as this is such a safety hazard.
ConsumerRightsExpert - 7-Dec-16 @ 12:29 PM
I have a 2016 Kia Sportage on lease and around 4 months ago had a problem where the dashboard lit up more or less every available fault light then the steering was lost. Car went in and was repaired after several weeks of investigstion. Last week the same situation only this time was being driven by my partner with my 8 month old daughter in the rear and steering was lost at 70MPH on the motorway and was stuck in a live lane! My partner has vowed she will never drive it again and I want rid of it! Kia customer service have been some of the worst I've ever experienced. The car is currently in the garage however I dont want it back and just want to end the lease. I want nothing more to do with Kia or the vehicle. What are my consumer rights in this situation?
Rob - 6-Dec-16 @ 2:40 PM
I leased a mitsubishi barbarian new in sept 2014 now covered 30000 miles. in the last 3 months it has been back to the dealership 5 times for the same issue (juderring/ misfire) where do I stand on this I am paying a lot a month and it is not serving it's purpose.
Lol - 13-Nov-16 @ 6:43 PM
Lou - Your Question:
I have ordered a contract hire vehicle from Seat via a lease company and the delivery time was 12 weeks but they have now extended this by a further 4 weeks as Seat have too high demand and are behind in making the vehicles. Our lease company cannot even get hold of Seat for a specific date. We do not want to wait any longer and this was not what we agreed on. We have paid an admin fee of £180 and there is a £360 cancellation fee if we cancel. We have called the lease company to ask if we have any rights in changing the vehicle or cancelling without charge and they said we have not rights. Is this the case? What if Seat delay even longer, surely there must be a time limit on this?

Our Response:
Unless you were given a specific delivery day and/or you did not agree that "time was of the essence" there's no much you can do about this. You can try and negotiate compensation if you have been put to inconvience because of the delay.
ConsumerRightsExpert - 10-Oct-16 @ 10:41 AM
I have ordered a contract hire vehicle from Seat via a lease company and the delivery time was 12 weeks but they have now extended this by a further 4 weeks as Seat have too high demand and are behind in making the vehicles. Our lease company cannot even get hold of Seat for a specific date. We do not want to wait any longer and this was not what we agreed on. We have paid an admin fee of £180 and there is a £360 cancellation fee if we cancel. We have called the lease company to ask if we have any rights in changing the vehicle or cancelling without charge and they said we have not rights. Is this the case? What if Seat delay even longer, surely there must be a time limit on this?
Lou - 7-Oct-16 @ 11:03 AM
Jemima - Your Question:
We have recently entered into a lease on a mazda 6. On arrival at our local dealer the car was not locking and so we did not get the car on the agreed day - the car was 'fixed' and we received it 4 days later. Since then it has gone back on 2 more occasions with the same problem.what are our rights if the problem continuum especially to recurr? The car arrived on 16th September and was delayed until 21st, went back on 22nd and again today 28th!

Our Response:
We suggest you tell the dealer you want to return the vehicle for a replacement or a refund/cancellation of the lease agreement.
ConsumerRightsExpert - 30-Sep-16 @ 10:15 AM
We have recently entered into a lease on a mazda 6. On arrival at our local dealer the car was not locking and so we did not get the car on the agreed day - the car was 'fixed' and we received it 4 days later. Since then it has gone back on 2 more occasions with the same problem ....what are our rights if the problem continuum especially to recurr? The car arrived on 16th September and was delayed until 21st, went back on 22nd and again today 28th!
Jemima - 28-Sep-16 @ 11:16 PM
I've just leased a Nissan xtrail but on its delivery journey it was damaged by the driver the lease company are saying they want to repair it and get it to me in 2weeks but I'm not happy with this and have asked for a replacementvehicle . This they are refusing to do stating it's still a new car even though damaged and repaired and that because it's leased it's not mine and I won't loose out on any value when sold !!! Please help on were I stand in relation to this and can I insist on reduced payments as it has been damaged so technically not a new car as it's value has been reduced thanks
Mrwhippy - 27-Sep-16 @ 3:56 PM
I took the car out on Nov 15. I'm struggling financially and going to hand car back where do I stand I really can't pay it anymore things have changed.
Kitty - 24-Jun-16 @ 10:33 PM
Wee ian - Your Question:
I have had a ford kuga for about 15 months now and after having the car for four months the engine blew up and the car was taken to the garage it needed a new engine I got the car back after a month and was told it was safe but after 1 day the car was back in the garage and it smelled of oil for about two months after that and I have been plagued with problems ever since and the hire purchase company refuse to help

Our Response:
Was this a new car or used?
ConsumerRightsExpert - 20-May-16 @ 2:23 PM
I have had a ford kuga for about 15 months now and after having the car for four months the engine blew up and the car was taken to the garage it needed a new engine I got the car back after a month and was told it was safe but after 1 day the car was back in the garage and it smelled of oil for about two months after that and I have been plagued with problems ever since and the hire purchase company refuse to help
Wee ian - 18-May-16 @ 1:11 AM
Deano - Your Question:
I have a brand new 2016 Mitsubishi outlander phev on a business contract hire, and the paint has come away in little round marks all over the car, bonnet, drivers door, passenger side does any one know how I stand legally with this.Thanks for your time dean

Our Response:
Contact you leasing company and ask them what they advise you to do.
ConsumerRightsExpert - 18-Apr-16 @ 2:00 PM
I have a brand new 2016 Mitsubishi outlander phev on a business contract hire, and the paint has come away in little round marks all over the car, bonnet, drivers door, passenger side does any one know how I stand legally with this. Thanks for your time dean
Deano - 16-Apr-16 @ 8:58 PM
Hi, took receipt of a Citroen C1 (56 plate) on the 11th Dec 15 (1st registered 4th Dec 15). Mid January 16 the car failed to start...taken to local Citroen garage where they diagnosed a 'software issue' after 3 days. The car failed to start again for a 2nd time around 2 weeks ago but it started the next morning (??). Last night it failed to start for the 3rd time with the same symptoms and it's now been towed to a Citroen garage. Surely this vehicle can be deemed as unfit for purpose? As I now have no faith in the car as its so intermittent at not starting. How many times/chances is feasible for the garage to fix it? Any advice would be appreciated. Thanks
Lorrlunn - 24-Feb-16 @ 1:19 PM
Hi All So i currently have a car on credit but the company appear to have gone bust (Credit car sales essex). I think they're under serious investigation for fraud. All their websites have been taken down and no one picks ups their phones (mail box full). I've received no correspondence in the post and i cant find anything about it on line What does this mean for me? Any advice would really help!
EKA - 16-Dec-15 @ 4:31 PM
Hi,I have a kia sorento on a 3 year private lease.I've had it 4 weeks and done just under 1,000 miles.In those 4 weeks I have had to be recovered by the RAC twice as therehas been an electrical problem with the vehicle.I don't trust the car anymore and have 3 young children so I'm concerned that the next time they could be stranded with me. I feel that I've been given a 'dud' and want to know my rights before I complain properly. Do I have any rights to reject the vehicle and get a refund or can I insist on a replacement car ?If neither then how bad would it need to get before I can view then as breaking their end of the contract ? Thanks G
Bonzo6 - 12-Nov-15 @ 3:34 PM
Hi There I am currently in my 3 month of a 3 year contract. I have recently had an accident causing damage to my driver rear side door. No other person or car was involved. Am I covered under warranty for this to get fixed from the main dealer nissan or is it my responsibility to have that fixed? Kind Regards Kristel
kristel - 25-Oct-15 @ 11:31 PM
Anna - Your Question:
Hi,I have a Scirocco 2.0 TDI Bluemotion which has been affected in the VW emissions scandal. Would this give me grounds to cancel my hire purchase agreement and give the car back as I feel like I've walked away with a car that wasn't what they advertised.Thanks,Anna

Our Response:
The problem is that the dealer would not have known or been aware of the problem when you were sold the vehicle. You have also not said how long you've owned the vehicle or how much use you have had from it...so we cannot really say how your consumer rights can be used anyway. VAG is currently putting together plans to recallthe relevant vehicles to rectify the problem, so you should wait and see what comes of that.
ConsumerRightsExpert - 7-Oct-15 @ 11:35 AM
Hi, I have a Scirocco 2.0 TDI Bluemotion which has been affected in the VW emissions scandal. Would this give me grounds to cancel my hire purchase agreement and give the car back as I feel like I've walked away with a car that wasn't what they advertised. Thanks, Anna
Anna - 6-Oct-15 @ 6:30 PM
@Biggsy. Really whether it's a known fault or not, you should get a better response than you have. The car is not fit for purpose if bluetooth is included as part of the sale. If the dealer had known about the fault and not told you, you could have returned the vehicle under the misleading practices legislation. As it is, contact the lease provider and see what the options are.
ConsumerRightsExpert - 29-Jul-15 @ 2:49 PM
No the fault was not mentioned, it was by reading The car manufacturer forums that I realised it was an ongoing issue that they didn't know how to fix. Would you say I have a right complain and request some form of compensation , plus who would I draft the letter to ? The leading company , the finance company , or the actual dealer ? Thanks Biggsy
Biggsy - 28-Jul-15 @ 7:34 PM
@Biggsy. If it's a known fault, were you informed of it at the time of taking out the lease?
ConsumerRightsExpert - 27-Jul-15 @ 2:28 PM
Hi, I am currently 3 months into a 2 year lease and I have noticed a problem with the Bluetooth connectivity of my in car media centre, under the warranty I booked my car in to the service centre to have the issue resolved, however I received a call from the dealer saying that it is a known fault and there is nothing they can do at the moment. Do I have any rights regarding the fault , can I contact the leasing company and request some form of compensation, after all the bluetooth system was a large factor in choosing this vehicle. Thanks for your time . Biggsy
Biggsy - 25-Jul-15 @ 1:57 PM
Our sons 1.4tsi Scirroco needs a new engine due to piston number 4 going at 46.000 miles and 4 and half years old. Our local garage says it is a common fault and after researching it we absolutely agree. Volkswagen have agreed to pay for the engine, but our son has to pay £3500 for labour. He leased the car 2 years ago through Players Cars and none of us realised that it only had a year left on the warranty. In all the other cases we have researched, no one has had to pay so much towards the labour. The finance company who own the car don't want to know either, even though the car can be given back for no fee in September. What car ran an article in 2013 about this problem, saying it is a known fault with that engine,but Volkswagen say it is not a recognised fault. Can you give us any advice please?
Sherbet - 23-Jun-15 @ 5:23 PM
@beth. if it's a common fault then you could try the manufacturer. Is it expensive to fix?
ConsumerRightsExpert - 18-May-15 @ 12:42 PM
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