Car Leasing Costs Revealed: What You’ll Pay & What to Expect

General Guides 

Driving a new car comes with a price – whether you purchase it outright or sign up for a lease deal contract. While you’ll likely be given an exact figure on an outright purchase, the average cost to lease a car can vary depending on different criteria. Our policy here is to be as transparent and upfront about all our costs and prices.

As vehicle leasing specialists at Gateway2lease, we’re here with a guide on all car leasing costs, breaking down what you’ll pay and what the process entails.

What’s the average cost to lease a car?

Car leasing contracts can vary in cost, with the lowest averaging from £120 and the highest stretching to £1,000+ per month. The cost will depend on many factors, but one of the main benefits of leasing a car is tailoring your requirements to meet your budget.

Understanding the key costs of car leasing

Initial rental payment

While many companies ask for an initial deposit which you’ll get back at the end of your contract term, an initial rental (IR) payment offers a cost-effective alternative and will be your very first payment.

You will choose a flexible amount to pay, be it one month’s, three months’ or 12 months’ worth of rental, and is part of the overall lease cost which you won’t get back. However, the more you pay initially will mean your monthly lease payments can be drastically lower.

Monthly lease payments

Something that everyone is familiar with in one form or another, after your IR you’ll start paying your monthly fees for your vehicle lease. These will typically be fixed throughout the whole length of your contract, so you’ll know exactly how much you’ll be paying regularly.

Mileage limits and excess mileage fees

Part of car leasing costs involves mileage and how many you’ll be doing over your term or the year. Before signing the dotted line, you’ll have to work out how many miles you plan to drive – a good way to work this out is to multiply your annual mileage by the duration of your contract. If you exceed your agreed-upon mileage allowance, you will have to pay additional fees per every additional mile.

Insurance costs for leased cars

Insurance won’t be included in car leasing costs, but instead will have to be acquired separately. You must have a fully comprehensive insurance policy for your leased vehicle. We recommend obtaining a quote before leasing to ensure affordability. Furthermore, proof of insurance is usually required before delivery.

Road tax, otherwise known as vehicle excise duty (VED) on the other hand, is included throughout the lease but is calculated at registration. If the government changes VED rates during the lease term, the additional cost will be passed on to you.

There are options for Fuel & Go leases with G2L, which include insurance, breakdown cover and more as part of your contract.

Maintenance and servicing costs

This is where the flexibility of a car lease shifts into gear. There are two options: a driver-maintained lease and a fully maintained lease. The former is where you, the driver, are responsible for servicing, replacement parts and MOTs and the costs associated. The latter is a lease package that incorporates all these in your fixed monthly fees, allowing for those conscious of budgeting.

End-of-lease charges (wear and tear, damage fees)

End-of-lease charges will apply for things like damage and wear and tear exceeding the recommended guidelines set out by the BVRLA. These costs are assessed by the finance provider and should be considered before returning the vehicle.

What affects the cost of leasing a car? 5 factors

The average cost of leasing a car can seem daunting, but it is actually one of the most affordable options for road users to drive the latest vehicles, all without the financial strain of depreciation. Now you know what you’ll be paying for, let’s explore what can affect these costs.

1. Car make, model and trim level

Alfa Romeo, BMW, Maserati, Toyota, Porsche, Mercedes and even James May’s favourite Dacia are just some of the car brands you can lease. However, luxury brands and the latest, high-performance models will come with higher monthly payments.

Their higher retail value and depreciation rates are something to consider, so opting for a lower trim level, or a model with fewer extras, can help reduce the costs of leasing a car.

2. Lease term length

Minimum lease lengths are typically 24 months, but this can extend to 60 months. The term length will affect your monthly costs, with shorter terms having higher monthly expenditures, while longer leases will mean lower payments.

There are benefits to a shorter term – you can drive the latest cars more often – and benefits for a longer term – lower payments, but you will be more at risk of higher maintenance expenses as the car ages.

3. Annual mileage allowance

Remember, make sure you set out your annual mileage allowance correctly when signing your lease. Going over your limit will mean paying more, not just a set amount, but a cost for every exceeded mile you travel.

4. Credit score and its impact on lease rates

Your credit score can impact the initial rental payment, but not always. If you have a lower credit score, the finance provider may require a higher initial rental as a condition of approval. However, lease rates themselves are set by the finance provider and don’t fluctuate based on individual credit scores.

5. Current market trends and special offers

The current market in the leasing world is ever-changing, along with manufacturer incentives and dealership promotions, and will affect lease prices. Gateway2Lease is proud to offer discounted leases and new car lease offers which help you reduce costs.

To further receive better deals, choosing the right time of year can also help you save, such as leasing during end-of-year model clearances.

Car leasing vs. buying: Which is more cost-effective?

When weighing up your decision to either lease or outright purchase a vehicle, there are pros and cons to both. The costs of leasing a car come with low monthly payments, minimal upfront costs and access to new cars every few years.

Buying a vehicle requires a substantial initial payment, and if you are using traditional financing, you’ll likely be paying higher monthly payments but will build equity over time, although you will have to consider the depreciation of the vehicle over time. Leasing is often more cost-effective for those who prefer driving a newer car with low maintenance costs. Buying is preferred for those with long-term savings who want ownership benefits.

Explore car leasing options at Gateway2Lease

Gateway2Lease are here to eliminate any concerns you might have regarding the costs of leasing a car. Thanks to our affordable offers and smooth and transparent leasing process, we assure that you will receive the perfect vehicle with a lease contract tailored to your exact financial needs.

You can learn more about what’s included and browse our range of models using our handy tools to cater your lease package. Whether for personal use or business, we are the leasing specialists to turn to. Get in touch with us to discuss your preferences on 01299 407 360.

Car leasing costs FAQs

Is leasing a car cheaper than buying?

Leasing typically comes with low monthly payments, with the average ranging anywhere between £120 and £1,000, as you’re only paying for the car’s depreciation during the term of lease. However, you won’t own the vehicle at the end of the agreement.

Can I negotiate the cost of a car lease?

Absolutely! Negotiating certain aspects of a car lease can help you get a better deal. Some factors you may be able to adjust include the initial payment and mileage allowance. In-stock vehicles often have more flexibility than factory orders. Talk to us at G2L to explore your options and find the best lease for you.

What happens if I exceed my mileage limit?

If you exceed your mileage limit, you will pay additional fees for every extra mile you drive. It’s wise to confirm your mileage allowance and maybe choose a higher allowance if you are concerned about going over your limit and having to pay additional fees.

Are maintenance costs included in my lease?

You can opt for a fully maintained lease, which includes servicing, maintenance, and repairs due to wear and tear. This covers essentials like oil changes, brake pad replacements, and tyre replacements. However, it won’t cover accidental damage or repairs due to negligence. If you’re considering this option, confirm the details with your finance provider before signing your contract..

Can I end my lease early, and how much does it cost?

Ending your lease early will incur an early termination fee, typically at least 50% of the outstanding monthly rentals, as calculated by the finance provider. These fees can be significant, so it’s important to understand the early termination terms before signing your lease.

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