Leasing Hub

If you're new to leasing & want to learn about the process, Leasing Options' comprehensive guide has everything you need to know about first-time car leasing

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How is the cost of a lease car calculated?

The price you pay for your car lease depends on various factors:

  • The make and model – so the value or purchase price of the vehicle
  • Length of the contract (typically between two and four years)
  • Annual mileage allowance
  • Initial rental payment (between one and 12 months instalments)
  • Optional extras such as paint, trim level and wheel spec
  • Additional contract options, such as maintenance and insurance
  • Processing fee (varies depending on the leasing company)

Alongside this, the estimated depreciation value may also be factored in, plus the anticipated residual value at the end of the contract.

For example, a Seat Ibiza 1.0 TSI 110 Xcellence Lux 5dr DSG model on a personal lease contract starts at £193.94 per month. This is calculated over a three-year term at 5,000 annual mileage with an initial payment of £1,745.46 (nine-month instalment).

Adding a maintenance package takes the monthly cost to £206.96 per month with an initial rental charge of £1,862.64* covering you for all servicing, MOTs and maintenance not covered by the warranty.

*Prices are subject to change.

What affects the price of my car lease?

Below are a number of important factors to be aware of that can increase car lease prices.

1. Car depreciation

Unlike many finance options, which requires you to pay the full cost of the car's valuation, leasing deals are based on the current and predicted value of the car at the end of the contract.

Due to depreciation, most cars you buy today reduce dramatically in value over the years. But thanks to leasing, this isn't your problem, as you simply return the vehicle once the contract is complete.

2. Initial Rental

At the start of the arrangement you will be given an option about the size of the initial payment you want to provide. The available choices typically amount to the same as 3-12 months of payments.

The more you are able to pay, the lower your monthly instalment costs will be for the duration of the contract. Some deals are available with as little as one month up front – ask your Account Manager for more details.

3. Maintenance

Most car leasing contracts last between two and four years. Government legislation states that cars have to undergo an MOT every year after they turn three years old.

But if you take out a maintenance package, you don't have to worry about MOTs, servicing or routine repairs for the duration of your contract. A full list of what's covered is available in our guide to leasing maintenance packages.

A maintenance package will increase your monthly payments overall but ensures you won't face any expensive, surprise repairs later.

It's also worth remembering a new lease car will be under the manufacturer's warranty, so any faults that don't appear as a result of excessive wear and tear or negligence will be free to repair.

4. Wear and tear

When you lease a car, it is expected a certain level of wear and tear over time and the vehicle is not expected to be returned in brand-new condition. This will be mentioned in the contract you sign at the beginning.

When the car is returned, it should be in as reasonable a condition as possible. If there is excessive damage to the vehicle, you may be asked to pay for any repair work carried out. If you're not sure what's classed as excessive, visit our end of lease guide for more information.

5. Mileage

Similarly, your lease contract will also state the maximum number of miles the car can be driven each year. If you have exceeded the agreed mileage limit when you return the vehicle, you’ll be charged for every extra mile on the clock.

It&Apos;s best to be accurate when choosing your mileage. However, with Leasing Options, it could cost as little as 5p for every additional mile.

6. Insurance

Fully comprehensive insurance cover is the only type of insurance accepted by the finance companies we use. This should cover you if anything bad happens to the car. You must also tell the insurers that the funder is the registered owner of the vehicle, and the cover should begin from the day it is delivered until it is returned.

If you want to add comprehensive cover to your monthly payments, we offer insured leasing, which also includes breakdown cover, maintenance, repairs and accident management. Visit our leasing insurance guide for more information.

Another type of cover recommended is Guaranteed Asset Protection (GAP) insurance. This will increase your payments but covers the costs of your car being stolen or written off, so it could be cheaper if you face an unfortunate incident.

7. Optional extras

When you've picked your car, you can add optional extras such as paint finish, wheel specification and trim level. However, these additions will add an extra cost to your overall lease instalments.

8. VAT

Here at Leasing Options, we include the cost of VAT on all of our cars, so you don't need to worry about this when payment is required.

What costs are involved in leasing?

There are various costs associated with car leasing before, during and after your contract. Below, we detail what you can expect at each stage:

Costs before the lease

When you take out a lease agreement, there are three main costs involved to begin your contract.

Initial rental payment

The initial rental cost is a similar concept to a deposit. However, unlike a deposit, this payment comes off the price of the car. The amount is based on your instalment cost, and you can pay between one and 12 months of initial rental.

The more you pay at this point, the less your monthly instalments will be over the contract. Find out more about initial payments in our guide.

First monthly payment

Alongside the initial rental, your first monthly instalment is also due.

Processing fee

Most car leases incur a standard processing fee at the start of the lease. At Leasing Options, this is a one-off charge of £299.99 (including VAT).

Costs during the lease

During your car lease, you can expect to pay the following:

Monthly instalments

Your car lease agreement sets out the monthly payments for your vehicle. These are fixed throughout the term, so you don't have to worry about interest hikes or market fluctuations.


All lease cars must have fully comprehensive insurance cover. To get an overview of insurance costs, use a comparison tool for various policy options. You can also opt for an insured car leasing package. For example, our Fuel & Go solution includes insurance and maintenance for an extra cost.


Whether you choose a traditional petrol or diesel vehicle, or an electric car, you'll need to factor in the cost of fuel or recharging during the lease.


It's essential to keep on top of the servicing and maintenance of your lease car. This includes following the manufacturer's guidelines on service intervals. You should also visit an approved garage to carry out any repairs and keep records of work carried out. If your lease

term is up to three years, there's no need to worry about MOTs. But if you are leasing for longer, these also need completing.

Alternatively, you can choose a maintenance package add-on with your contract for an extra charge.

Costs at the end of the lease

In most cases, there are no costs at the end of the lease when you hand your car back but, you may incur charges due to various factors such as:

Excess mileage charge

Your contract has an agreed mileage allowance. However, if you exceed this, an excess mileage charge is calculated based on the miles you've gone over.

At Leasing Options, this charge could be as little as 5p per mile. But if you're nearing the allowance, it's best to speak with an account manager to assess the best options to avoid hefty charges.

Before taking out your lease, it's helpful to gauge how many miles you'll need in your contract. To work this out, use our Annual Mileage Calculator for an accurate guide.

Fair wear and tear

Every lease car is covered by a fair wear and tear policy. This means it's expected that some wear and tear may be present. But excessive damage outside of the guidelines will incur a repair charge. This cost will be invoiced to you at the end of the contract.

For more information about what happens when you return your car, check out our end of car lease guide.

What fees do you avoid with Leasing Options?

Leasing a car with Leasing Options offers an affordable way to drive the latest vehicles. In addition, you also avoid various fees that typically come with lease agreements, such as:

Road tax

Road tax is included in your car lease for the whole term, so you could save hundreds each year. It's particularly beneficial for those leasing cars valued at over £40,000 as you avoid the premium car tax surcharge of £355 per year.


No matter what car you choose, it'll be delivered to your designated address free of charge.

Registration fee

Your new car is registered with the DVLA before it's delivered, so you won't have to pay this fee.

What car can I lease for my budget?

The car you can afford to lease will depend on how much you can comfortably spend each month, without stretching your finances to the limit. This involves looking at your guaranteed monthly income against your regular outgoings.

Before picking the car you want to drive, consider:

  • The maximum amount of money you want to spend every month
  • How much of an initial payment you can make
  • How many miles a year you expect to drive
  • Whether you want additional maintenance and insurance

If you have a specific manufacturer or model in mind, use our handy Compare Tool to find the best vehicle for your budget.

You don't need to worry about shopping around either, as we at Leasing Options work hard to offer the most competitive prices on all our deals. But if you do happen to find a cheaper quote, we guarantee to beat it with our Price Match Promise.

Not sure which car you want? Search for a lease deal now. We have over 30 makes to choose from, and you can even sort cars by budget, so it's simple to find the right vehicle you can afford.

What are the cheapest cars to lease?

If you're looking for an affordable leasing deal, check out the five cheapest lease cars at Leasing Options:

Citroen AMI – from £119.93 per month

Seat Ibiza – from £159.82 per month

Toyota Aygo X – from £164.94 per month

Mazda 2 – from £166.81 per month

Fiat 500 – from £169.81 per month

*prices are subject to change.

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