How the car leasing industry works

Here's information that you should know before your next car lease

Return To LeaseCat To Compare Car Leasing Deals

The car leasing industry in the UK hasn't really changed since the early 2000s. Many of the first car leasing companies that appeared in the UK had rather small, unimpressive websites - featuring a handful of pages and a very small handful of car lease deals. Around 2006, there was a major shift in the car leasing industry. Two interesting events happened. Firstly, there was an explosion of small 'bedroom' car leasing companies. These would typically be extremely small business ventures, ran from a website by entrepreneurs who were eager to have a piece of the car leasing industry action. These companies would often act as broker for larger car leasing companies, who would pass on commission either for leads or deals. The second key change around 2006 was a suddenly increase in companies with very sophisticated database driven websites. Almost without exception (we have to say 'almost' because there might be an exception that we don't know about), these car leasing companies paid for data from a company called CAP So, suddenly there was lots of car leasing websites in the UK offering quotes for every make and model of car in production.

At any given point in time there are approximately twelve thousand vehicle variants in production. So, if you add statistics like engine size, emissions and so on you'll appreciate that the data set quickly becomes huge. The first companies who started featuring massive loads of searchable car lease data on their websites, for the most part, became industry leaders between the years of 2004 and 2006. However, there was a problem.

As time went on, more and more car leasing companies found out about CAP and they too wanted to get in on the action. So, gradually more and more twelve thousand plus, huge database driven car lease websites appeared on the scene. Today, the industry has reached a stage where most serious players in the car leasing industry have very similar database driven websites. They all sell the same vehicle (often from literally the same production line), and they all charge more or less the same prices. In other words, they're all the same.

The various car leasing companies of the UK are obviously eager to compete and to differentiate themselves from their competition. Until now, the car leasing companies have only had two variables with which they could differentiate themselves from each other:

How branding has been used in the car leasing industry

If you go to any of the major search engines and try a search for 'car leasing', then you'll quickly discover that most of the websites look the same. They certainly share the same general functionality. So, one of the areas that gets a lot of attention in the industry is branding. Branding includes things like; website design, colour scheme, slogans, descriptors and website usuability. The problem is, with everybody playing the same game, year after year, it's reasonable to speculate that the UK general population have reached a stage where they want more than just branding. They want great, lost cost car leasing deals!

How car leasing companies use price adjustments

Most of the car leasing companies in the UK are brokers. This means that they are not actively involved in processing the deals from start to finish. Most of the time, the actual car leasing deals are funded by banks and other investment agencies, typically called funders. This deserves a little bit of explaining, so here we go...

Whenever a person leases a new car, a large investment agency (i.e., a 'funder') usually has to purchase a new car from a vehicle manufacturer. The funder is hoping that they can get their money back plus more, by charging a fee for the actual lease and then - eventually - selling the car (usually at auction) after the lease has expired. So, when somebody leases a car, as far as the manufacturer is concerned, this equates to one unit sale.

The car manufacturers generally charge the same prices for their vehicles and the car leasing brokers usually use the same funders. So, generally speaking, the end result is that most of the car leasing companies in the UK all charge more of less the same kinds of prices.

So, in a never ending attempt to compete and attract customers, one of the things that car leasing companies commonly do is they'll tweak the numbers in order to draw in customers. There are several variables that car leasing companies can play around with, in order to come up with deals that look attractive to potential customers. For example, one company could focus on building a deal with a low initial deposit, whilst another company might focus on a low monthly rental. Both companies might be selling literally the same car (yes, literally!) and for the precise same price, but by tweaking the numbers, they will look as though they are offering radically different deals - to the untrained eye.

But there's some good news for people who are looking for good car leasing deals

Remember when we said that manufacturers and funders all charge more of less the same price? Well, strictly speaking, that's not entirely true. There are exceptions. You won't be surprised to learn that car manufacturers typically offer discounts (sometimes up to a third) for bulk buyers. Also, the funders themselves can offer volume related bonus and other perks to the funders (i.e., the car leasing companies). Finally, it's very typical for the various local car dealerships to either throw in extras or perhaps even discounts, in an attempt to have the leasing companies us them to source new cars.

Add all of this together and suddenly, you have a competitive, thriving industry with great deals to be found by those who are willing to search around. Of course, it helps enormously to be handy with a calculator! As explained above, there are usually several variables to consider when trying to figure out who is offering the best car leasing deals.

This is where LeaseCat can help! We don't use Cap. We like them! We think they're great. However, we don't see any value in creating a 'me too' car leasing site. So, our goal is to change the car leasing industry in the UK by offering THREE exciting things to the industry - the likes of which have not been attempted by anyone else, as far as we know.

We're not deluded. We know that we're starting from scratch and we've got a long road ahead and a lot of work to do. However, we are confident that - in time - we can quite literally transform the car leasing industry. When we do this, two parties will benefit enormously: (1) the people who are searching for car leasing deals and (2) the car leasing companies.

That second point might seem like day dreaming. However, we know that the cost of acquiring deals has gone through the roof over the past year. We also understand that the one or two leaders of the car leasing industry appear to be moving ahead, leaving everyone behind and effectively creating a monopoly on the car leasing industry. If LeaseCat succeeds then the UK car leasing industry will continue to remain competitive and open. We want companies to be able to compete. When lots of companies are free to compete then everybody wins. Customers get great deals and lots of entrepreneurs get to run businesses - often employing vast numbers of staff members in the process. Monopolies on the other hand, kill competition, produce rubbish deals for customers and also put smaller and medium sized companies out of business. For an example of how monopolies can ruin the party for everyone, you only need look at your latest electriciy bill. In that instance, we have a small handful of companies who have a stranglehold on the industry and - because of that - everyone (apart from the shareholders) gets a raw deal!

Politics aside, let's be honest. It's the the industry had a shake up anyway! We have worked really hard to bring this site to life. Pulling it off was technically very challenging. If the car leasing companies and the general public enjoy and embrace LeaseCat then we like to think that we'll be a positive force in the industry by offering a great car leasing comparision website to the general public and a monopoly safeguard to the car leasing companies. Let us be clear. We want the car leasing companies to thrive. All of them!

So, now you know a little bit about how the car leasing industry works, what we're bringing to the table and how we plan to change the industry for the better. Thank you for reading and please check back again for more information pertaining to the UK car leasing industry.

Patch :)

Lease Cat is the UK's first authentic car leasing comparison website. As you can see, the site isn't out of the starting blocks yet – however – it will be soon. When Lease Cat soon throws the doors open then you'll be able to find car leasing deals for any make and model that is currently in production.

Car leasing is complicated. Once of the reasons why nobody else has launched a car leasing comparison website is because it's very difficult to compare prices on a financial product that is so complicated. As a matter of fact, out observation is that it's generally very difficult for customers to figure out what the best car leasing deals are. After all, there are several variables to consider. These variables include; initial deposit, basic rental, term and service rental – just to name a few.

What Lease Cat is going to bring to the table – for the first time – will be a car leasing comparison website which takes on board all price variables and then – thanks to some simple maths – we'll be able to tell you, with mathematical certainty what the best deal is. This is something which has never been presented to the car leasing industry before.

Of course, it's possible that some visitors might not agree with our mathematically derived conclusions about what the best car leasing deals are. For example, there might be some other variables that matter for certain customers, such as vehicle availability. So, we'll be presenting all of our visitors with a full breakdown of dozens of car leasing deals. You'll be able to filter by variables such as monthly rental, initial deposit and more. Now, the question, “What is the best car leasing deal?” is something that we have obsessed over for literally years. Our conclusion is that in order for customers to make an informed decision about what the best car is to lease, then a new variable needs to be introduced to the car leasing industry. This new variable is, what we're calling, 'lease cost per mile'. So, we'll be taking on board all of the variables that make up a car leasing deal, we'll be doing some maths and then – based on our calculations – we'll be telling visitors which deals represent the best value. Again, this is something that has never been presented to the car leasing industry. It's a first.

The site itself will be very simple. So, we're not planning on adding lots of statistics about things like fuel economy, cubic size and so on. There are already plenty of websites offering that kind of information and we don't see any point in presenting another one. Our assumption will be that the kind of people who use Lease Cat will be people who have already made up their minds about what kind of car they are thinking about leasing. So, once people have made an informed decision about what kind of vehicle they'd like then they'll be able to come to Lease Cat and find out what the best deals are in just a few clicks.

Lease Cat will having our grand opening in January 2017. That's right around the corner. So, if you're at the stage where you're maybe thinking about your next car lease then our advice is to hang tough for just a little while longer and then just us a whirl. Once we get out of the starting blocks, the car leasing industry will never be the same again - hopefully!

“Patch” (aka, Lease Cat)