Can I lease a car for 3 months?
One of the top search terms for my Short Term Car Lease business is “Can I lease a car for 3 months?.” For sure, of course you can but is it a lease?
Let’s get into the nitty gritty of the finance system in the UK. For ‘hires’ of less than 89 days, effectively you’re hiring a rental car and as such Credit Consumer laws do not kick in. Over 90 days and you will require regulated or un-regulated documents along with cooling off periods where appropriate.
Thats the boring bit over, now lest delve in to the 3 month car lease and the most cost effective way of taking one. What you need in this situation is a Short Term Car Lease specialist and not a Daily Rental firm.
3 month car lease costs?
If you took a Daily Rental car for 3 months or 90 days as it were, it would cost approx. £2,300 for something like a Hyundai i10 (correct as of 9th May 2019), now thats expensive but it does include insurance, DDW, Theft Protection, taxes and VAT. Plus this is a group of car and you are not guaranteed what vehicle will turn up.
Now lets look at a similar car on a Short Term Car Lease for 3 months, at the time of writing their are similar cars as follows:
Toyota Aygo X-Play 1.0 VVT-i X-Play 5dr
This works out at £349.00 plus VAT per month (£418.80 inc. VAT) plus there is a Documentation Fee of £175.00 plus VAT (£210.00 inc. VAT) and if required a collection fee at the end. Delivery in England and Wales is FOC.
The total cost for the above is £1466.40 but it doesn’t include insurance. Now if you are a business, chances are you will have a fleet policy where you can add the vehicle on. But if you are an individual short term car insurance is really expensive.
So long as you provide the correct details to the insurance company, you can take a 12 month policy, explain that the car is a hire car and I received quote of £910.32 for an annual policy and £82.76 per month to pay this monthly. This is with a zero voluntary excess.*
There would be cancellation fee’s and amendment charges to pay if I were to cancel after the 3 months, but chances are I will either be swapping into another vehicle or have a car on order.
So let’s add this to the Toyota Aygo utilising a short term car lease provider along with the Hyundai Quote from Hertz.
Hertz — Hyundai i10 or equiv.
Total Cost for 3 months — £2387.63 inc. VAT
Cocoon Vehicles — Toyota Aygo 1.0 VVT-i X-Play 5dr
Total Cost for 3 months — £1864.68 inc. VAT
This is assuming a cancellation fee of £150 by insurance company
This is a saving of £522.95 over the 3 month period.
Of course, the longer you can run the contract the cheaper it will be, if you need a 6 month car lease, there are many short term car lease companies that offer fixed contracts cheaper than the flexible solutions (that you require for the 3 months) but for this example and keyword, its a 3 month car lease.
Do I need to pass a credit check?
Generally for a Daily Rental car, you would not need to go through a credit check. They will however, check the validity of your driving licence via a DVLA Driving Licence Code and they may take a hefty deposit on a credit card for damages, etc.
With a Short Term Car Lease provider, you will have to go through either a soft or a hard credit check, you will also have to provide proof of insurance and a deposit. Many offer Non-status car leases but terms may differ than those offered in my example.
Don’t dismiss Car Subscription Services!
Car Subscriptions is the new buzz word in the Motor Trade, manufacturers are offering these such as Care by Volvo and Carpe by Jaguar Land Rover. My personal opinion is that its the manufacturers attempting to cut out the dealerships, something I will go into on another occasion.
But there are also independent car subscription companies such as Drover and Subscribe and Drive, of course my own company Cocoon Vehicles offers Car Subscriptions.
This service allows you to take a car from 28 days with everything included except insurance and fuel with the option to pause, upgrade or downgrade with ease. Every firm is different and Drover do offer the option of insurance as well for true fixed cost motoring.
What are your thoughts on 3 month car leases?
What do you think to the idea of a 3 month car lease? Have you got any alternative ways of achieving the same cost and length of time? I’d love to hear from you in the comments below.
About me and my business…
I’ve been in the motor trade for 15 years, by no means am I experienced but I wanted to learn everything I could in my time within dealerships. I’ve seen sales tactics, promotions and the bad bits. When I set up Cocoon Vehicles in 2007 I wanted it to be transparent, I also wanted it to offer something that other brokers didn’t.
Short Term Car Leasing was the way to go for us, especially after the credit crunch. We underwrite the majority of deals so we can take on people that can’t always get credit, expats and those with adverse credit.
Insurance Quote *At the time of writing, the quote was obtained by a 38 year old person, living in the DE postcode area working in the Motor Trade. No accidents or Penalty Points and with 5 years no claims. Quote provided by ComputerQuoteInsurance.com