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The USA leads the way in vehicle leasing, as many consumers prefer to pay for their transport with a monthly payment rather than a loan or buying outright with cash. The UK also has suitable leasing offers, but most of these tend to centred around the self employed or business owners and as a total of car owners is much less. than the USA. The popularity of leasing also varies from manufacture to manufacturer. For examples, BMWS and Mercedes, over 60% of new cars sold will be on a leasing agreement, but for other makes, the percentage is much less.

Used Cars On Finance

The key difference tend to apply to the used car market. It is very rare that any used car within the UK will be bought using a traditional leasing contract, where in the USA this form of buying is much more popular. Buying a used car is pretty much confined to a loan (either from a bank of finance house), or the old fashioned way of cash. Bank loans are not taken out using the assets of the car as collateral, this comes from the credit score of the buyer, or whether other assets are owned such as a house. In the States, leasing agreements can be taken out using that vehicle as collateral, providing sufficient deposit has been taken to handle the depreciation of that car.

Lets Call It Contract Hire

An example of how the Brits see lease in business different just look at the terminology. The term contract hire, is commonly used throughout all dealership websites and relates to a “contract of long term car hire”. The common term for private lease is something named as Personal Contract Purchase (PCP), where monthly payments are based on the depreciation of the vehicle, than at the end of the contract, the car can be bought by the leasee at a pre-agreed price of just handed back. The difference between business contract hire and a private agreement is down to tax liabilities, businesses can claim back all or some of the VAT paid, but a Personal Contract Purchase will include VAT as it is assumes the car is only used for personal reasons, including the travel to and from a permanent place of work.

Selling Cars On Both Sides Of The Atlantic

Even when searching for a car that is to be leased in the UK, the full window prices would in most cases be the primary information posted on the website, with a secondary price of what it would cost through a contract hire agreement. There is one exception, and that is leasing brokers, who do not sell cars, only lease them. In the USA however, there are a huge amount of marketing that focuses purely on monthly payments and to locate the total or buy outright price you need to look deeper into any advert. Many Americans will decide if they can afford their dream vehicle based on how much the monthly payments are, where in Britain, although now exclusive the culture is still based on the outright purchase value, even if a contract hire, PCP or leasing agreement is being sourced.

Mark Flanighan like to write about the vehcile leasing processesa and cultures and loves visiting car shows and driving.