Can a private buyer lease a car in Ireland?

How does leasing differ from a PCP and could it represent a better option?
David Mullen

Published on November 11, 2022

While many people believe that car leasing is primarily a way for businesses to maintain and renew their fleets of company cars, leasing is an option that's also available to private car buyers in Ireland. It's certainly not the most common way to buy a car, but it is an alternative to hire-purchase, outright ownership and the ubiquitous PCP car finance deal - and it's on the rise.

What is car leasing?

Another term for leasing is Personal Contract Hire (PCH), which sums up what leasing is and how it differs from Personal Contract Purchase (PCP). Essentially, leasing is an agreement to rent a car for an agreed period (usually two to four years) with the lessee parting with a fixed monthly payment in addition to an upfront deposit.

The biggest way in which leasing differs from either a PCP or hire-purchase (HP) agreement is that the lessee will never own the car. With a PCP, for example, at the end of the contract period, the driver has the option of making a one-off balloon payment and purchasing the car outright. This isn't the case with leasing, and the car must always be handed back at the end of the term.

What are the advantages of car leasing?

The advantages of leasing are basically the same as those of a PCP deal in that the buyer gets to drive around in a shiny new car that is, by its nature, going to be more reliable than an older one. Depreciation isn't a concern as it would be with buying a new car using a bank or credit union loan (though of course, depreciation is built into the leasing cost), and the fact that the cars rarely reach the four-year age threshold for a compulsory NCT is another weight off the driver's mind.

Motor tax is nearly always built into leasing payments, so that's another advantage, while there's also often the option (usually for an extra fee) of letting the leasing firm handle servicing and maintenance. Car leasing payments usually tend to be cheaper than hire-purchase payments as you're not aiming to buy the car outright.

Are there disadvantages to leasing compared to a PCP?

As to whether leasing has any specific advantages over a PCP deal, for private buyers it's not abundantly clear that leasing is actually a better option. It has all the same downsides - potentially unaffordable monthly payments if your personal circumstances change, mileage limits, having to worry about denting and scratching a car that isn't yours - but without the ability to actually buy a car that you may have grown to like in the preceding years.

Less sentimentally, leasing rules out the ability to turn a little profit on the difference between the Guaranteed Future Minimum Value (GFMV) of the car and its actual value, which is an option that exists on a PCP deal. The market value of a car may be higher than the final balloon payment agreed at the beginning of a PCP deal (the GFMV), which could enable a canny owner to make the balloon payment, sell the car and put the profit towards the deposit on another PCP deal. This isn't possible with leasing.

How much does leasing cost?

That, as you might expect, is dependent on a broad range of factors. The car you choose (and you can, more or less, have whatever takes your fancy) very much affects your monthly payments. A small hatchback such as a Renault Clio, for example, is going to cost a lot less to lease per month than a Lexus ES. Other factors affecting your monthly payments depend on the internal policies of the company with which you're dealing. As a general rule, the higher your initial deposit, the lower your monthly payments will be. The higher the mileage limit you agree, the more expensive your monthly payment will be too.

Just to illustrate the point: with the leasing firm Nifti, an Audi A1 S line with a manual gearbox, a €4,000 deposit and a mileage limit of 10,000km per year will cost €444 per month to lease on a 48-month contract. The same car with a €2,500 deposit and double the mileage limit will cost €504 per month to lease on a contract of the same duration.

What kind of cars are available to lease in Ireland?

Many manufacturers (Volkswagen and Jaguar to name but two examples) offer leasing on cars within their ranges, but pick an independent leasing firm and your choice expands hugely. If you have a preferred type of car you'd like to lease, the leasing company will search among the dealers with which it works for something that's a close match, buy the car and rent it back to you. If there's nothing available within the dealer network, the leasing company may order a car to your specification (within limits) from the factory and then rent it to you for the duration of your contract.

Higher-end cars from premium German manufacturers (think Audi and BMW) are popular choices as monthly payments take the sting out of the upfront cost, but there are also companies leasing out humbler models such as the Hyundai i20 or Toyota Yaris, so the choice is broad.

What are some of the leasing companies operating in Ireland?

In addition to the leasing arms of various manufacturers, there are quite a number of leasing companies operating in Ireland. Leaseplan, Zucar, Nifti and Joe Duffy Leasing are all operators in the field providing leasing plans to private customers, while a number of other leasing firms cater only to business clients. If leasing is an option, consider getting in touch with any of the above firms or indeed the myriad other leasing companies in Ireland to explore your options. As ever, it's worth doing your research and shopping around for the best deal on offer.

Anything else worth considering?

Similarly to a PCP deal, there are a few things worth bearing in mind if you're planning on leasing a car. Don't be tempted to set your mileage limits too low in the pursuit of lower monthly payments. If you exceed your limits, you will usually be subject to financial penalties that may wipe out any savings you made on your payments. Be realistic.

Leasing companies expect to see a normal level of wear and tear when you return a car, though if you return a car with major scratches, dents, badly kerbed alloy wheels or ripped or burned seats, the leasing firm will likely slap you with a hefty repair bill.

Don't financially overstretch yourself. If your circumstances change and you need to exit your lease early, there may be penalties.