Car Leasing FAQs

Have questions about leasing a car or van? Our Car Leasing FAQs provide straightforward answers to some of the most common questions about Personal Contract Hire (PCH), Business Contract Hire (BCH), finance applications, mileage, maintenance, delivery and returning a leased vehicle.

At Applied Leasing, we've been helping private individuals and businesses with vehicle leasing and finance since 1990.

The exact terms and requirements of a lease can vary between finance providers and agreements, so you should always check your individual quotation and contract documentation.

Understanding Car Leasing

What is car leasing?

Car leasing allows you to use a vehicle for an agreed period in return for regular rentals rather than purchasing the vehicle outright.

You normally choose a vehicle, contract length, annual mileage and initial rental.

With Personal Contract Hire (PCH) and Business Contract Hire (BCH), the vehicle is normally returned to the finance provider at the end of the agreement.

How Does Car Leasing Work? – Step-by-Step Guide

What is Personal Contract Hire (PCH)?

Personal Contract Hire is a vehicle hire agreement for private individuals.

You normally pay an initial rental followed by fixed monthly rentals for an agreed contract period and mileage.

You do not own the vehicle and there is normally no contractual option to purchase it at the end of the agreement.

Read our Personal Contract Hire Guide

What is Business Contract Hire (BCH)?

Business Contract Hire allows eligible businesses and organisations to lease cars or vans for an agreed period and mileage.

The business pays agreed rentals during the contract and normally returns the vehicle to the finance provider at the end.

VAT and tax treatment can depend on the vehicle, its use and the circumstances of the business, so appropriate professional tax advice should be obtained where required.

What is the difference between PCH and PCP?

PCH is primarily a vehicle hire agreement. You make agreed rentals and normally return the vehicle at the end.

PCP (Personal Contract Purchase) is a different type of vehicle finance agreement that normally includes an optional final payment if you want to purchase the vehicle.

If ownership is important to you, make sure you understand the difference before choosing an agreement.

Contract Length, Mileage & Payments

How long does a car lease last?

Contract terms vary by vehicle and finance provider.

At Applied Leasing, vehicle leasing agreements are commonly available between 24 and 60 months, although shorter or different terms may occasionally be available.

How many miles can I choose on a car lease?

Annual mileage allowances depend on the vehicle and finance provider.

Some agreements may be available from around 5,000 miles per year, while considerably higher mileage allowances may be available for customers with greater driving requirements.

Choose a realistic mileage allowance based on how you expect to use the vehicle.

What happens if I exceed my lease mileage?

If you return the vehicle with mileage above the total contracted allowance, the finance provider may apply an excess mileage charge.

The excess-mileage rate should be detailed in your agreement.

If your mileage requirements change significantly during your lease, contact us or your finance provider to find out whether the mileage allowance can be amended.

What is an initial rental?

The initial rental is the first rental payment made under a Contract Hire agreement.

It is not a deposit towards ownership of the vehicle.

For example, a 3+35 profile normally means an initial rental equivalent to three monthly rentals followed by 35 regular monthly rentals.

A larger initial rental will generally reduce the following monthly rentals, but it does not give you any ownership of the vehicle.

How are my monthly rentals paid?

Monthly rentals are normally collected by Direct Debit by the finance provider.

Payment arrangements and dates will be detailed in your finance documentation.

Do I need to pay a deposit?

Contract Hire normally involves an initial rental rather than a traditional vehicle-purchase deposit.

In some circumstances, a supplying dealer or another party may require an additional payment relating to a particular vehicle or order.

Any such payment, its purpose and the terms applying to it should be explained before you proceed.

Vehicles & Delivery

Are your lease vehicles brand new?

Most vehicles supplied through Applied Leasing are new.

Some offers may involve pre-registered vehicles. This means the vehicle has already been registered before your lease begins.

Where a vehicle is pre-registered, you should consider the remaining manufacturer warranty and when an MOT will become due.

The vehicle status should be explained as part of the quotation or order process.

Can you lease a used car?

Used vehicle leasing may be available from some finance providers, although availability is generally more limited than new-vehicle leasing.

This can include previously registered or ex-fleet vehicles.

Always check the vehicle's age, mileage, condition, remaining warranty and contract terms.

Will my leased vehicle have a warranty?

New vehicles normally have a manufacturer's warranty, although the length and coverage vary between manufacturers and vehicles.

A pre-registered vehicle's warranty may already have started from its original registration date.

Check the applicable manufacturer's warranty and consider whether your lease could continue beyond the warranty period.

How long does lease-car delivery take?

Delivery times vary significantly depending on the vehicle.

A vehicle already in stock may be available relatively quickly once all required documentation and finance requirements have been completed.

Factory-order vehicles can take considerably longer.

Any lead time provided before the vehicle is available should normally be treated as an estimate rather than a guaranteed delivery date, unless specifically confirmed otherwise.

Do you deliver vehicles nationwide?

Applied Leasing can arrange delivery to locations across the UK mainland, subject to the vehicle, supplying dealer and individual delivery arrangements.

Any specific delivery requirements or potential additional costs should be confirmed before ordering.

Who should accept delivery?

The person or authorised representative accepting the vehicle should inspect it carefully when it arrives.

Check:

The correct vehicle and specification have been supplied.
Any agreed options are present.
The vehicle appears to be in the expected condition.
Any visible damage or issues are recorded and reported in accordance with the delivery procedure.

Finance Applications & Credit Checks

What happens when I apply for vehicle finance?

The relevant finance provider will assess your application according to its own eligibility and creditworthiness criteria.

Depending on the applicant and agreement, this may involve checking information such as:

Identity and address.
Credit history.
Existing financial commitments.
Employment or business status.
Income and affordability.
Business financial information where applicable.

Finance is subject to status and approval is not guaranteed.

Will applying for a car lease affect my credit file?

A finance provider may carry out a credit search when assessing your application.

The type of search and how it appears on your credit file can depend on the finance provider and stage of the application.

You should check the relevant application information before proceeding.

What documents might I need?

Requirements vary depending on the applicant and finance provider.

You may be asked to provide information or documentation relating to:

Identity.
Address.
Income.
Employment.
Bank details.
Business accounts or financial information.
Company directors or authorised signatories.

Additional information may be requested where necessary.

Can I lease a car if I have bad credit?

It may be possible, but acceptance is not guaranteed.

Finance providers use their own eligibility, creditworthiness and affordability criteria.

A poor credit history may affect whether an application is accepted and the options available.

Can a new business lease a vehicle?

Potentially, yes.

Some finance providers consider applications from start-ups and newly established businesses.

They may request additional information such as business bank statements, management accounts, director information or other supporting documentation.

Acceptance will depend on the finance provider's assessment.

How long does a finance decision take?

Decision times vary.

Some applications can receive a decision quickly, while others may take longer if the finance provider needs additional information or further assessment.

We will update you when a decision is received.

Finance Agreements & Cancellation

When will I receive my finance agreement?

Once the relevant requirements have been satisfied, the finance provider will issue the documentation required for your agreement.

This may be provided electronically for e-signature or using another method specified by the finance provider.

Read all documentation carefully before signing.

Do I have a 14-day cooling-off period on a car lease?

Do not assume that every vehicle leasing or finance agreement automatically provides the same 14-day cooling-off or withdrawal right.

Cancellation and withdrawal rights depend on factors including the type of agreement, how it was entered into and the circumstances of the customer.

Where statutory or contractual cancellation or withdrawal rights apply, the relevant documentation should explain the applicable period, procedure and consequences.

If you're unsure about your rights, contact us or the finance provider before taking action.

Can I cancel after ordering my vehicle?

Your vehicle order and your finance or hire agreement may involve separate contractual obligations and cancellation rights.

Cancelling or withdrawing from one does not necessarily cancel the other automatically.

Cancellation charges may apply depending on the order, timing and circumstances.

Before cancelling, contact Applied Leasing so the applicable terms, rights and potential costs can be explained.

Insurance, Servicing & Maintenance

Is insurance included with car leasing?

Normally, no.

Unless your particular agreement specifically states otherwise, the customer is responsible for arranging suitable fully comprehensive motor insurance for the leased vehicle.

Check your agreement for the finance provider's insurance requirements.

Who is responsible for servicing a leased car?

The vehicle must normally be serviced and maintained in accordance with the manufacturer's requirements and the terms of your lease.

With a customer-maintained agreement, you are responsible for arranging and paying for required servicing and maintenance.

With a maintained agreement, specified servicing, maintenance and other items may be included within the monthly rental.

Always check what your particular maintenance package includes and excludes.

What does a maintenance package include?

Coverage varies by finance provider and package.

Depending on the agreement, a maintenance package may include:

Routine servicing.
Certain maintenance and repairs.
Replacement tyres subject to the package terms.
Breakdown assistance.

Exclusions and conditions apply, so check the relevant maintenance documentation.

Who pays for tyres on a leased vehicle?

On a customer-maintained agreement, tyre replacement will normally be the customer's responsibility.

Some maintained agreements include replacement tyres subject to the package terms, exclusions and acceptable wear requirements.

Can I modify a leased vehicle?

You should not modify a leased vehicle without checking your agreement and obtaining any permission required from the finance provider.

Unauthorised modifications could result in costs or issues when the vehicle is returned.

During Your Lease

Who owns a leased vehicle?

For Contract Hire agreements such as PCH and BCH, the vehicle is normally owned by the finance provider or leasing company.

You pay for the use of the vehicle during the agreed contract rather than purchasing it.

Can I end my car lease early?

Possibly, depending on the agreement and finance provider.

However, early termination of Contract Hire may result in significant charges and may not be available under every agreement.

Do not assume that you can simply return the vehicle and stop making payments.

Contact Applied Leasing or the finance provider to obtain an early-termination quotation and understand the implications before making a decision.

What happens if my circumstances change?

Depending on the circumstances and agreement, there may be options available, but these will vary between finance providers.

If you're experiencing difficulty making payments, contact the finance provider promptly rather than allowing payments to be missed.

End of Lease

What happens at the end of a car lease?

With PCH and BCH, the vehicle is normally returned to the finance provider at the end of the agreed contract.

The vehicle may be assessed for:

Mileage.
Condition.
Service history.
Missing equipment.
Missing keys.
Missing documentation.

Additional charges may apply where the vehicle exceeds the contracted mileage or its condition falls outside the applicable return standards.

What is fair wear and tear?

Fair wear and tear is the acceptable deterioration that occurs through normal use of a vehicle over time.

It is different from damage caused by an accident, impact, neglect or inappropriate use.

The BVRLA publishes industry guidance explaining acceptable vehicle-return standards.

BVRLA – Fair Wear and Tear Guide

Will I be charged for damage?

You may be charged if the vehicle has damage that falls outside the applicable fair-wear-and-tear standard.

The BVRLA recommends checking the vehicle before collection against the relevant return standard.

Consider inspecting the vehicle well in advance of the return date so you have time to address any issues where appropriate.

How is my leased vehicle collected?

Collection arrangements vary between finance providers.

Applied Leasing may be able to help with the process, or the finance provider may require you to arrange collection directly.

The relevant collection procedure should be confirmed as your contract approaches its end.

Can I keep my leased vehicle for longer?

This depends on the agreement and finance provider.

Some providers may offer an extension in certain circumstances, but this should not be assumed.

What Other Charges Could Apply?

Depending on your agreement and circumstances, additional costs could potentially include:

Excess mileage.
Damage outside acceptable fair wear and tear.
Missing equipment, keys or documentation.
Early-termination charges.
Charges relating to unpaid fines, penalties or other costs passed to the finance provider.
Administration charges permitted under the relevant agreement.

Your individual agreement should explain the charges that may apply.

Is Applied Leasing a Finance Provider?

No.

Applied Leasing Limited acts as a credit broker and not a funder or lender.

We work with a selected panel of finance providers to help customers explore vehicle leasing and finance options.

Applied Leasing Limited is an Appointed Representative of Jurni Limited, which is authorised and regulated by the Financial Conduct Authority for credit broking activities.

Financial Services Register – FCA

Is Applied Leasing a BVRLA Member?

Applied Leasing works within the vehicle leasing industry and provides customers with access to BVRLA guidance where relevant.

For current membership information and the applicable BVRLA codes, please refer to our BVRLA information or contact our team.

BVRLA Consumer Advice

More Car Leasing Guides

For more detailed information, explore our guides: