As the names suggest, a leasing contract or contract purchase is a legally binding contract that provides you with a particular car for a particular length of time, where you agree not to exceed a particular mileage each year.

You may or may not choose to include maintenance in the contract. In exchange you agree to pay the monthly rental and other costs associated with the contract, each month.

If you decide you don’t like the colour, or that a different model would be better for you several months into the contract and choose to end it, you could face some significant penalty charges for breaking the contract.

A more flexible option

If you choose a subscription instead, it’s likely to offer considerably more flexibility than a traditional lease or purchase agreement. You might only need a car for a month or so, perhaps associated with a particular job or family circumstances. Or you might decide that you’d like a convertible for the summer months and a more practical car for the winter months. A subscription service would allow you to do that without leasing penalties.

So, what’s the catch? There’s really only the obvious one. Combine the words “flexibility” and “contract” in the same sentence and it usually means only one thing – a subscription is almost certainly going to cost you more each month than a purchase or lease contract.

“You’re not locked in for two, three or four years. There is an opportunity to get out,” explains Duncan Chumley, CEO of subscription provider Mycardirect,.

“It came from speaking to customers about the growth of contract hire. As people started to enter into personal contract hire, then more customers would come to us and say, ‘I want to change my car.’ Well unfortunately, you can’t, because you’ve taken a three- or four-year lease and you are committed to it for that period of time.

“If you want to upgrade or downgrade, then you have to exit your lease and in most cases it’s quite expensive to exit a personal lease, there’s no easy get-out clause. And of course, as you don’t own the car, you can’t just sell it.”

Chumley is the former chief commercial officer of Daimler Fleet Management and former managing director of Free2Move Lease, so knows the ins and outs of leasing and purchasing agreements well.

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