Car leasing usually costs between £100 and £1,000 per month – this is the average most people will spend per month on a car lease, but it depends on several factors. Your rental payments are calculated based on the vehicle you choose, the lease length, your annual mileage, changes to the spec and whether you have a personal or business contract.
However, it's not just the monthly payments you need to include in your budget. Learn more about the costs of car leasing below, plus other expenses you need to factor in, in our comprehensive guide.
How Are My Monthly Instalments Calculated?
Here are the main 4 things which will determine the price of your monthly lease deal:
The car you choose.
Your initial rental payment.
The length of the lease.
These factors, among others such as a particular manufacturer’s reliability, all contribute to a car’s expected depreciation (the difference between a car’s initial value and the expected value at the end of an agreement). Your monthly instalments are based on this change in value over the course of your lease.
The type of car you want will have the biggest effect on the instalments. So, if you choose a luxury brand like BMW, it will usually cost more than a Vauxhall, for example. If you do decide on a more expensive car, you can reduce your monthly rentals by making a larger initial rental payment upfront.
Different models and body types will affect your price, too, but our cheap car leasing deals can help you get the best offers possible.
How much you drive also has a big impact, with a higher mileage resulting in larger monthly payments. It’s important you choose a mileage limit that accurately reflects your average miles per annum, however, as you may be charged for excess miles beyond the agreed limit.
Now you know how your monthly payments are calculated, find out which other expenses you'll need to cover when you lease a car.
What Do You Pay Upfront When Leasing A Car?
Before your agreement begins, here's what you can expect to pay upfront:
Vehicle Reservation Fee
We don’t charge ‘reservation fees’, so you don’t need to pay anything for us to hold your chosen car while your lease is being processed.
The first payment you’ll make towards your lease car is known as an ‘initial rental payment’. The amount is worked out by multiplying your car’s monthly payments by one, three, six, nine or 12. For example, if the car you choose costs £200 per month for a two-year contract, you could pay £200 initially. Or if you paid six instalments upfront (£1,200), your deal would reduce to around £170 per month.
The more you pay upfront for your initial rental, the cheaper your deal will be each month. It’s taken from your bank 7-10 days after the lease car is delivered.
During Your Contract
With Vanarama, delivery is free anywhere in the mainland UK, so you won't be charged anything to receive the car. Read on to find out what you need to budget for during the agreement.
After receiving your new car and paying the initial rental, your rentals will be taken each month by the finance company. These will continue until the end of your contract.
Most leasing companies require you to have fully comprehensive insurance, which covers damage to your vehicle and any third-party liability. Your insurance should start on the same day that you receive the lease car.
Make sure to shop around and compare quotes to find the best price. You can pay your car insurance monthly, but it will be cheaper if you pay the full premium outright.
Guaranteed Asset Protection (GAP) insurance protects you from losing out if your lease car is written off or stolen. This is because your insurer may only pay out the vehicle's current value (with depreciation factored in) and not the full amount left on your lease contract term.
For example, if your car is written off and the insurer pays you £10,000, but your agreement has £15,000 left to pay, GAP insurance would cover you for the £5,000 difference. Otherwise, you'd have to pay for this yourself.
Like standard car insurance, GAP insurance quotes will vary depending on the driver and the vehicle, so make sure to compare prices before you buy. You can also spread the premiums over several months or save more by making one upfront payment.
If You Lease A Car, Who Pays For Repairs?
All lease cars are new and come with a full manufacturer's warranty, which normally lasts for three years. This covers you for major mechanical faults, so you usually won't need to pay extra if your car has a problem. After the warranty period ends, you are responsible for the repairs.
You also need to pay for servicing and MOTs throughout your agreement, provided you haven’t opted for an optional maintenance package. Cars should be serviced every year (or however often the manufacturer recommends in the vehicle's servicing schedule), which you can arrange through a local garage or the main dealership. A basic service will cost around £125 each year.
New cars need an MOT three years after their registration and then annually from that point. A garage legally can't charge more than £54.85 for a car's MOT, but then you need to pay for any repairs on top. There's no need to book an MOT if your contract is three years old or less.
You do, however, have the option to include a maintenance package in your car leasing deal. This will increase your monthly instalments but will cover you for servicing, MOTs, routine repairs and tyre replacements – providing peace of mind.
Don't forget to factor in the cost of fuel on top of your monthly payments. However, leasing companies will occasionally offer cashback on fuel when you take out a deal, so it's always worth asking for. There are also significant savings to be had by switching to an electric car lease, which could cost as little as 7p per mile to run.
If your circumstances change before receiving the car, our Price Promise guarantees you a hassle-free refund even if you've signed a contract and paid to reserve it. However, the finance company may charge their own admin fee if you cancel.
How To Cancel A Car Lease Early
Once you accept the car's delivery, your agreement begins. If you want to end a lease contract early, you will need to pay a termination charge to the funder. This is usually 50% of the remaining payments due. Always contact your leasing company if you can no longer afford your instalments or wish to explore your options, and they will explain what is available.
End Of The Lease
Standard wear and tear is expected with any vehicle and Vanarama won't charge excessively for small scuffs or a light scratch. However, if the car is damaged beyond the British Vehicle Rental & Leasing Association (BVRLA) Fair Wear and Tear guidelines, you will need to pay for the repairs.
Excess Mileage Charge
Excess mileage affects the car's depreciation value, which is factored into your monthly payments. If you go over your total annual mileage limit, you'll pay for the excess on a per-mile basis. You should always contact our helpful advisors if you think you're going to exceed your mileage allowance so we can help.
If you're ready to start leasing, check out our fantastic choice of cheap car lease deals and find the best price on your next vehicle. You can even search cars by budget if you want the most cost-effective lease deal, with prices beginning at around £150-£250 per month. Or if you want to learn more, see how leasing compares to buying and discover which option is best for you.