01442 838195
Lowest Price Guaranteed
FREE 30-Day Returns
Trust pilot logo
Rated Excellent
Road Tax & Roadside Assistance Included
FREE & Fast Delivery
Lowest Price Guaranteed
FREE 30-Day Returns
Trust pilot logo
Rated Excellent
Road Tax & Roadside Assistance Included
FREE & Fast Delivery
Lowest Price Guaranteed
FREE 30-Day Returns
Trust pilot logo
Rated Excellent
Road Tax & Roadside Assistance Included
FREE & Fast Delivery

How Much Does It Cost To Lease A Car

Car leasing usually costs between £100 & £1,000 per month - this is the average most people will spend per month on a car lease, but it depends on the car you choose. Your rental payments are calculated based on the type of vehicle you choose, the lease length, your annual mileage, changes to the specs & 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:

  1. The car you choose.

  2. Your initial rental payment.

  3. Depreciation.

  4. Mileage allowance and length of lease.

The type of car you want will have the biggest effect on your monthly payments. So, if you choose a luxury brand like Mercedes-Benz, it will be more than a Vauxhall. 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 & body types will affect your price too. Don't forget to check around for special offers to get the best deal possible.

The last thing which affects your monthly payments is the car's depreciation, which is determined by how much you drive. If you have a higher mileage, the vehicle's residual value (how much it’s worth at the end of the contract) will decrease. This means your deal will cost more to compensate for the depreciation of the car.

Now you know how your monthly payments are calculated, find out which other expenses you'll need to cover when you lease a car.

Upfront Costs

Before your agreement begins, here's what you can expect to pay upfront:

Vehicle Reservation Fee

Leasing companies usually charge to reserve the car you want. Currently, at Vanarama, we do not charge to reserve a vehicle. 

Initial Rental

With leasing, you make an initial rental payment as your first month's rental. This can be between 1-12 months' worth of the car's monthly instalments. The more you pay, the cheaper your deal will be each month.

For example, if the car you choose costs £200 per month for a 2-year contract, you could pay £200 initially. Or if you paid 6 instalments upfront (£1,200), your deal would reduce to around £170 per month.

The initial rental will be taken from your bank 7-10 days after the lease car is delivered.

During Your Contract

With Vanarama, delivery is free anywhere in 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.

Monthly Rentals

After receiving your new car & 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 & any third-party liability. Your insurance should start on the same day that you receive the lease car.

Make sure to shop around & 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.

GAP Insurance

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) & not the full amount which is left on your lease contract term.

For example, if your car is written off & the insurance 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 this yourself.

Like standard car insurance, GAP insurance quotes will vary depending on the driver & 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.

Maintenance, Repairs & Servicing

All lease cars are new & come with a full manufacturer's warranty, which normally lasts for 3 years. This covers you for major mechanical faults, so you 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 & MOTs throughout the length of your agreement. 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 & 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 the repairs on top. There's no need to book an MOT if your contract is 3 or less years old.

You do have the option to include a maintenance package in your lease deal. This will increase your monthly instalments but will cover you for servicing, MOTs routine repairs & tyre replacements.


It might seem obvious but don't forget to factor in fuel! Leasing companies will occasionally offer cashback on fuel when you take out a deal, so it's always worth asking for.

Cancellation Fees

If your circumstances change before receiving the car, our Price Promise guarantees you a hassle-free refund even if you've signed a contract & paid to reserve it. However, the finance company may charge their own admin fee if you cancel.

Once you accept the car's delivery, your agreement begins. If you want to end the contract early, you will need to pay a termination charge to the funder. This is usually 50% of the remaining payments due. Always contact the leasing company if you can no longer afford your instalments & they will explain the options available.

End Of The Lease

At the end of the contract, you can simply return the vehicle for free. However, it will be inspected by the finance company and if the car is returned in a poor condition you will be charged.

Damage Charges

Standard wear & tear is expected with any vehicle & leasing companies 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 Costs

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’lll pay for the excess on a per-mile basis. You should always contact the leasing company if you think you're going to exceed your mileage allowance so they can help. 

If you're ready to start leasing, check out our fantastic choice of car leasing special offers & find the best price on your next vehicle. You can even search cars by budget if you want to keep your costs low, with prices beginning at around £130 per month. Or if you want to learn more, see how leasing compares to buying and discover which option is cheaper.

Cars Related Content

How Does Car Leasing Work?
Everything you need to know about leasing a car can be found in our handy guide.Read Guide
Should You Buy Or Lease A Car?
Are you looking for a new car but can't decide how to pay for it? Read on for the pros & cons...Read More
Old vs New? How Much Could You Save Leasing New?
We've picked 5 of our current top offers and compare them to similar used vehicles, to show you what you could save by leasing through Vanarama…Read More