Essentially, there are two common ways of financing a car: Personal Contract Purchase (PCP) and Personal Contract Hire (PCH). The PCH leasing means you rent a car for an agreed number of months or years and an agreed amount of fixed fee. Though you can choose from a variety of options, depending upon your circumstances, you have the option to lease a car as part of your business or just for yourself — each have their own benefits.
Vehicle leasing will allow you to drive a ritzy new car every few years without worrying about its resale value, possible repair/maintenance, and hefty monthly payments as lease installments are relatively low. In fact, car leasing was specifically designed to make vehicles more affordable for people because the ever-increasing vehicle prices have gravely decreased people’s ability to afford a car loan.
Wondering how car leasing allows companies to reduce monthly installments? Well, it lets them reduce monthly installments since they require the lease buyer to pay just for the cost of the vehicle for the amount of time they are using it. It’s quite similar to renting. You don’t own anything and you are only paying for the right to drive your leased vehicle.
As a result, you are bound to return the vehicle to the leasing firm at the end of the leasing contract. The idea of leasing first gained traction back in the 1990’s when vehicles became too expensive and a lot of people couldn’t afford to get one. It made the ‘new car experience’ more feasible by enabling people to drive brand new cars by paying lower monthly payments.
Another key reason behind its popularity and acceptance is certain professions got tax breaks because of leasing.
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