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How much does it cost to lease a car?

Leasing a car is an easy process that makes driving a new car affordable, but how is the price of a car lease worked out, and what else might you need to know?

Auto Trader

Words by: Auto Trader

Published on 12 May 2023 | 0 min read

What is the average cost of leasing a car?

The average cost to lease a car usually ranges from £100 to £1000 per month (maybe more), but there are lots of factors that can change your monthly payment amount. You’ll also need to factor in other costs such as your initial rental amount, insurance policies, maintenance and roadside assistance, if they’re not included in your lease agreement. Read on to find out all you need to know about the costs of car leasing.

What determines the cost of a lease car?

There are a few initial factors that will determine the monthly rental costs of your car lease:

Your chosen car

The car you choose has a huge impact on your leasing costs. If you choose a high-end SUV with a higher total on-the-road price rather than say a small hybrid city car, you’ll see a big difference in monthly costs. Brand-new models that have been recently released are also likely to be more expensive on average than leasing a model that has been on the market for a while.

Initial rental

The size of the initial rental you make at the start of your lease will impact your monthly costs significantly. The larger the amount you pay upfront, the more you’re paying off the total cost of the lease. This in turn lowers the rest of your monthly rental payments.

Length of contract

Combined with a larger initial rental payment, if you have a longer lease agreement you’ll tend to pay less monthly, as the overall cost of your lease is spread over a longer time span.

Agreed annual mileage

The more mileage you add to a car, the more quickly it will depreciate in value. This is because cars with less mileage on the clock are likely to be sold for a higher price by the finance company that owns it once your lease is up. Be sure to work out how many miles you’ll be driving accurately to avoid going over and being charged for excess mileage.

What are the initial leasing costs?

Some lease providers may require you to pay a Vehicle Registration Fee to secure the vehicle for you while your lease agreement is sorted out. Whilst this is often the case, there are no registration or admin fees when you lease with Auto Trader.
Around 7-10 days after the delivery of your lease car, you’ll pay the initial rental. This is usually the first and largest payment you'll make during your lease agreement, and it is taken by direct debit. Initial rentals are worked out as a multiple of your monthly costs - usually 3, 6, 9 or 12 months. When customising your lease online, our calculator will show you how your initial rental payment affects your monthly rentals.

What costs am I liable for during my contract?

There are a few recurring costs that you’ll need to keep up with during your lease agreement:

Monthly rental payments

After your initial rental payment amount is paid, your fixed monthly payments will be deducted by direct debit on the same day each month. It is really important that you don’t miss any of your regular payments, and should contact the lease provider as soon as possible if you’re having any problems with affordability.

Car insurance

Most leasing providers require you to have fully comprehensive car insurance for your vehicle in place by the time it’s delivered. You can find out more about insuring a lease car in our guide.

GAP insurance

GAP insurance is there to cover you in insurance claims where you’d be left with a shortfall due to the car's depreciated value. It is not mandatory, but is often taken on by leasing customers for the added peace of mind it offers.

What costs can there be at the end of a lease agreement?

There are two charges that you may need to pay at the end of your agreement, but if the car has been well taken care of and driven as expected they can be completely avoided:

Damage charges

Some minor wear and tear is always expected after a leased car has been driven for a few years, but major unfixed damage or wear will result in a charge from your leasing provider. The British Vehicle Rental & Leasing Association (BVRLA) Fair Wear and Tear guidelines set out a standard for what’s acceptable (or fair) and what isn’t. Both leasing customers and leasing companies have to abide by these guidelines.

Excess mileage charge

If a leased car is driven beyond the annual mileage agreed in your contract then it will have depreciated in value more than anticipated. Because of this, you’ll be charged a specific pence-per-mile cost for every mile you’ve driven over your agreed limit. The amount you’ll pay per mile will be specified in your lease agreement documents. For more information on what happens at the end of a car lease read our helpful guide.

Is it cheaper to lease or buy a car?

There are a lot of factors that can make buying or leasing a car the right choice for you, but often leasing a car means paying less upfront. Our article on buying vs leasing is a great way to find out more about the pros and cons of both.

Do I need to pay for repairs on a lease car?

As lease cars are brand new, you won’t need to MOT them until they’re three years old. During this time period, you will need to take care of any faults or damage that crop up as it is your responsibility to ensure the car is serviced regularly.
All of the new cars you can lease at Auto Trader come with a standard manufacturer's warranty, which usually covers mechanical faults for between 3 and 7 years, or a given amount of mileage. You can also choose to add a maintenance and servicing package to your lease deal to help cover those costs for additional peace of mind.

Find out more about car leasing

If you’re new to car leasing, take a look at our easy-to-understand leasing guides that covers everything from how car leasing works to buying vs leasing and much more. If you’re ready to find your next vehicle, browse our latest car leasing deals.