Nationwide Vehicle Contracts explains car leasing for pensioners and everything you need to know
Depending on your budget and needs, car leasing can be an excellent option for many drivers, even pensioners. If you're considering getting a new car so you can travel more now that you're retired, you may still be able to secure car finance. Being in retirement means you have more time to do the things you've always wanted to do. If you wanted to, you could now drive to the top places in the UK, for example, The best UK beaches to visit or see your family and friends.
Car leasing can be helpful for pensioners on fixed incomes who wish to drive a new vehicle with the most recent safety features every few years or who desire a shorter financial commitment for their car.
So if you are a pensioner or a retiree and are unsure if you can still lease or if it is a good choice, then you'll want to read our guide below.
How does leasing work?
Car leasing is a long-term rental agreement offering the use of a car or van for a set period at a fixed monthly price. It provides an alternative to purchasing a new car or van with a bank loan or dealer financing and is often cheaper.
You pay an initial rental fee at the beginning of the contract, typically equal to three monthly instalments. You then make monthly payments for the contract term, usually two, three, or four years.
At the end of the contract, you just hand the car back with no more commitments. You also won't have to worry about depreciation or selling the vehicle, as the lease company will take care of everything.
Do Car Lease Agreements have an Age Restriction?
One commonly asked question about car leasing is about age limits for vehicle agreements, specifically whether there is a maximum age limit for leasing a car.
Vehicle lease agreements are credit-based, meaning an individual's eligibility will be based on several factors, including:
- Personal details - Marital status and the number of dependents.
- Credit history - Finance companies will use, amongst other things, a credit report on potential customers.
- Income and expenditure – This information ensures you can comfortably afford the finance deal you have applied for.
- Employment history – Employment details for the past three years are used to determine how your current income and expenditure will likely evolve over your lease.
- Residential history – Generally require at least five years' worth of address history, which is used to confirm your identification and could be used to check the credit histories of anyone with whom you are financially connected.
What is the main difference when leasing as a pensioner?
Although there are some differences, leasing a car is essentially the same whether you are a pensioner or not. One difference is once a person becomes 70, their driver's licence expires, and after that, it must be renewed every three years. Although renewal is free, there is a chance that it won't be accepted. If, for any reason, your licence is not renewed, you must return the vehicle and will be liable for early termination fees. Plus, you cannot keep the lease in your name and have another person use the car since the leaseholder must be the primary user of the vehicle. Thankfully this is a rare occurrence, but it is important to remember.
Things to consider when deciding if leasing is right for you as a pensioner
Although leasing has many advantages, there are a few other factors you should consider before choosing if it's the best option for you.
You won't own the vehicle at the end of the lease, the vehicle must be returned to the finance provider. Likewise, as you do not own the vehicle, you won't be able to alter the car without your funder's permission first.
Most finance providers will demand that the car be returned in compliance with the BVRLA's reasonable wear and tear guide. If it is returned with damage or wear outside of these guidelines, there could be a penalty fee at the end of the lease.
When you sign a lease agreement, you agree to a set mileage allowance and must return the vehicle within this allowance. Once you have signed the contracts, you agreed that there would be an excess mileage fee if you travelled more than the allotted amount. Most funders would consider increasing your mileage if you become aware throughout the lease that you are about to exceed the allowance. If you feel you might go over your set mileage allowance, you'll need to contact us with your current mileage and what you would like this to increase to, and we can request a quote from the funder.
What happens in the event of the death of the contract holder?
In the event of the contract holder's death, the estate's trustee will need to contact the finance provider ASAP. An early termination amount will be required for agreements involving the vehicle's return at the conclusion of the contract, such as a Personal Contract Hire or contract hire agreements. An early termination amount will be demanded in addition to the balloon payment for contracts where the car is typically purchased at the conclusion of the contract, such as a Personal Contract Purchase or Contract Purchase.
Depending on the circumstances, the finance provider may waive the early termination cost, but each decision will be made individually. Therefore, trustees should first contact the finance provider.
Find out more about Car Leasing by calling Nationwide Vehicle Contracts on 0345 811 9595 to speak to one of our skilled leasing specialists about the right option for you.
