For: Fixed monthly cost, flexible repayment periods, servicing can be included
Against: You never own the car, excess mileage charges
This sort of car finance deal is effectively a long-term rental agreement. Personal contract hire or personal lease is a simple, hassle free way of getting a new car for a fixed monthly sum.
Contract hire and leasing deals typically run over two, three or four years, with an agreed mileage limit applied to the car. You’ll pay a deposit and then monthly repayments, although there’s no option to buy when you reach the end of the term, so no balloon sum to worry about.
When the leasing deal’s term is up, you can hand the car back to the maker or take a new lease. You’re responsible for the upkeep of the car during the term, but servicing and maintenance can be included as part of the package, helping to keep costs predictable.
Because these rental agreements aren’t working towards you taking ownership of the car, they tend to be cheaper.
They also factor out the cost of depreciation which is so often the major sting in the tail of new car ownership.