What happens if I exceed my mileage limit on a lease?

If you exceed the agreed mileage on your Contract Hire agreement, you will be charged an 'excess mileage' fee, typically calculated in pence per mile. This is why we work closely with you during the quoting stage to ensure your contract reflects your actual driving habits.

Is insurance included in a car lease?

Generally, insurance is not included in the monthly rental for PCH or BCH. You must arrange fully comprehensive insurance for the vehicle, and the leasing company must be named as the registered owner and keeper on the policy.

Does leasing affect my credit score?

Yes, as car leasing is a form of financial agreement, it will appear on your credit report. Because Egon Car Leasing is FCA Regulated, all applications undergo a credit check. Making consistent, on-time monthly payments can actually help demonstrate financial reliability.

Leasing vs. Buying: A Total Cost of Ownership (TCO) Assessment

When considering your next vehicle, the headline price is often the most distracting figure. For drivers in the UK market, particularly those looking at premium marques such as Audi, BMW, or Mercedes-Benz, the actual cost of getting behind the wheel is far more complex than a simple sticker price. To make a truly informed financial decision, one must look beyond the monthly payment or the cash price and conduct a comprehensive Total Cost of Ownership (TCO) assessment.

The traditional model of car ownership—buying a vehicle outright or through a loan and keeping it for several years—is facing unprecedented challenges. As we move into 2025 and 2026, the automotive landscape is shifting rapidly due to the transition to Electric Vehicles (EVs), fluctuating residual values, and evolving tax incentives. This guide, powered by Egon Car Leasing, provides the strategic tools necessary to evaluate whether a Personal Contract Hire (PCH) or Business Contract Hire (BCH) agreement offers superior value compared to outright purchase.

Personal Contract Hire (PCH)

The Invisible Cost: Understanding Depreciation in the Premium Sector

For many, the most significant expense of car ownership isn't fuel, insurance, or even interest—it is depreciation. This is the 'invisible' cost that only reveals itself when you come to sell or trade in the vehicle. In the premium car market, a vehicle costing £50,000 can lose a staggering percentage of its value the moment it leaves the showroom.

50-60%

Average depreciation for a premium petrol or diesel car over the first three years of ownership in the UK.

View source

This risk is amplified in the current climate of EV adoption. While electric cars offer significant benefits, including lower running costs and reduced Benefit-in-Kind (BiK) rates for business users, their long-term residual values remain a point of uncertainty for many. By opting for a leasing contract, the driver transfers the risk of this depreciation to the leasing company. You simply pay for the use of the car over a fixed term—typically 24 to 48 months—and hand the keys back at the end, protected from market volatility.

Lease vs. Buy Total Cost Estimator

Compare the total capital outlay over a standard 36-month period to see the difference between leasing and buying a premium vehicle.

Monthly Lease Rental£550

Initial Rental (e.g. 6 or 9 months)£3,300

Estimated Maintenance (over 3 years)£900

Total 3-Year Commitment

£23,450.00

Factors That Influence Your TCO Assessment

Business Contract Hire (BCH)

When performing a Leasing vs. Buying: A Total Cost of Ownership (TCO) Assessment, you must include several variables that often go overlooked. At Egon Car Leasing, we emphasize transparency to ensure our clients understand every penny spent. The primary components of TCO include:

Initial Rental vs. Cash Deposit: A lease usually requires a smaller upfront 'Initial Rental' compared to the 10-20% deposit often required for traditional finance.
VED (Road Tax): Most lease contracts include Road Tax for the duration of the agreement, saving you several hundred pounds over the term.
Maintenance Packages: Fixed-cost maintenance packages can be added to a lease, covering servicing, wear-and-tear items, and even tyres, providing total budget certainty.
VAT Recovery: For business owners, BCH allows for 50% VAT reclamation on the finance element and 100% on maintenance, a significant saving over buying.
Disposal Costs: Selling a car privately or negotiating a part-exchange takes time and effort. Leasing eliminates this entirely via the 'hand-back' process.

Electric Lease offers

Our Take

In our experience at Egon Car Leasing, the 'Value' in our tagline often comes from protecting clients against the 'Residual Value Cliff.' As the UK moves toward the 2035 ban on new ICE vehicles, the resale market for high-end diesel and petrol cars is becoming increasingly unpredictable. Leasing isn't just about the monthly payment; it's a strategic hedge against the future market value of the vehicle. We see our role as financial advisors as much as vehicle providers, ensuring you aren't left holding a depreciating asset that is difficult to sell.

Assessing Your Vehicle Strategy

Is leasing the right financial move for your specific circumstances? Use our scored assessment below to evaluate your priorities regarding vehicle acquisition, risk management, and cash flow.

Leasing vs. Buying Suitability Assessment

Determine if your driving habits and financial goals align better with leasing or purchasing.

0 of 5 answered0%

Question 1 of 5

How often do you like to change your vehicle?

How to Interpret Your Results

When interpreting your Leasing vs. Buying: A Total Cost of Ownership (TCO) Assessment, focus on the 'Cost per Mile' and the 'Opportunity Cost' of your capital. If buying a car requires a £10,000 deposit, that is capital tied up in a depreciating asset. In contrast, a lease might only require an initial rental of £2,000, leaving you with £8,000 to invest elsewhere or keep as a liquidity buffer. Furthermore, for premium vehicles, the manufacturer's warranty often aligns perfectly with a 3-year lease term, meaning you never have to worry about the cost of major mechanical failures.