What affects the cost of a lease vehicle?

What factors might change the price of my lease car?

It’s one of the biggest benefits of leasing: you can tailor every aspect of the lease deal to suit your exact requirements. Whether that be the length of the lease, the mileage limit or the amount you pay upfront. But the question is, how do these choices affect the overall price of your lease deal?

How you build the various components of your lease deal will affect your monthly lease fee. While some elements, like annual mileage, will be fixed depending on your personal requirements, flexibility around other factors, such as term and model, could end up saving you money.

The biggest step to getting the best lease car deal is to completely understand how car leasing works. Once you are aware of all the variable factors contributing to the cost of your lease, it is easier to work out how you can either get a more desirable car for your money, or save on the overall cost of your lease car.

Here we take a look at the various factors that contribute to the cost of a lease vehicle. 

How does the car I’m leasing affect the lease price?

With a lease car you are paying for the vehicle’s depreciation: the difference in the cost of the vehicle at the beginning of the lease compared to at the end.As higher value cars have more value to lose, these will cost more to lease. Equally, cars that devalue quickly will cost more to lease than those that have a strong resale value.

This is an important factor to consider as, in theory, a £50,000 car that’s worth £30,000 after three years would cost the same to lease as a £25,000 one that depreciates to £5,000 – as both lose £20,000.

So, choosing a car that holds its value will mean your monthly lease payment will be lower. A vehicle’s depreciation is dependent on a number of factors including brand reputation, fuel economy, safety standards and whether it is the latest model. Currently, electric and hybrid vehicles are known to depreciate less, as are SUVs and hatchbacks due to their growing popularity.

How does the lease term affect the lease price?

When searching for your perfect lease deal you are likely to find contract lengths of either 24, 36 or 48 months. Shorter lease terms of 12 or 18 months are also sometimes available, however, these will be less frequent compared to the longer contract lengths.

The length of your lease will affect your monthly fee because the rate of depreciation changes over a car’s lifetime. Vehicles tend to depreciate quicker in their first few years of ownership and slows down as the cars get older. Consequentially, taking out longer lease contracts can reduce your monthly fee considerably. For example, at the time of writing, you can lease a Mercedes-Benz GLC for more than £10 per month less on 48 months than 36 months.

However, this isn’t always a given and in some cases monthly payments can be smaller on shorter term leases. This could be because of new model releases due or mileage thresholds or special offers applied by the funder of the deal. While you can customise all the lease deals we advertise on site, they will always default to the lowest possible rate and the terms applicable to that. Therefore, if a vehicle is cheaper per month on 24 months than it is on 48 months (and it does happen) you will know about it.

How does the initial payment affect the lease price?

You will pay for the cost of your lease car with an initial payment followed by a set number of monthly payments. As the total cost of your lease is largely fixed, the more you contribute in your initial payment the smaller your monthly fees will be (and vice versa).

The only factor affecting this is the fees a funder applies to the lease. Although rare, some funders do increase their fees on leases with a smaller upfront payment as this effectively increases the amount you are borrowing. If the overall cost of the lease is something you are considering, then putting more down up front could save you money. However, in most cases, the size of your initial payment can be decided based on the repayment structure that best suits you.

Your initial payment will be a multiplication of your monthly fee in increments of 1, 3, 6, 9 or 12. You can't therefore request to invest an amount outside of these totals. It is for this reason that you will see lease profiles described as 9 + 23 or 6 + 35 etc: the first figure refers to the initial payment and the latter quantifies the amount of following monthly payments. 

By way of example, if your profile is 9 +23 and the monthly fee was £249 you would expect to pay an initial payment of £2241 (9 x £249) followed by 23 monthly payments of £249. You can easily work out the total cost of the lease by multiplying the monthly lease cost by the total payments made, in this case £249 x 32 (9 + 23) = £7968. The actual length of the lease is also made clear. In this case it is 24 months as you are paying what equates to 9 monthly payments in month 1, followed by 23 months of normal monthly payments.

How does mileage affect the lease price?

Because mileage is directly linked to the value of the vehicle, the greater the annual mileage on the lease the greater the monthly cost is likely to be. Ensuring you are accurate in anticipating the mileage you will need over your lease term is therefore imperative to keeping costs down.

An accurate mileage prediction will prevent you from overpaying for your lease: either for miles you haven’t used or for charges on the miles travelled beyond your contract. You will be charged excess mileage fees for going over your agreed limit and this can range from 3 – 50p per mile. There can be the option to increase your mileage limit during your lease; for this you would need to contact your funder directly and this would be at their discretion.

When estimating your mileage, our recommendation is to calculate the mileage travelled during an average week and multiply this by 52. Then add 5% to account for unplanned trips.

As with term, special discounts can be applied to certain mileages which may mean you could have more inclusive miles for less per month. As always, this will be displayed on site as you will be defaulted automatically to the terms returning the cheapest price.

How does the automotive industry affect the lease price?

Within the leasing world, the best lease deals can change more frequently than we can advertise them. Although a fair representation will be visible in our top offers, our leasing consultants are always in the best position to know the models that are currently returning the best lease rates.

Furthermore, our dedicated pricing team are constantly searching the market and our dealer contacts for exclusive rates. This could be a negotiated discounts if we commit to selling a certain volume. Or periodically pre-registering cars so we can transfer this saving onto you.

Therefore, make the most of having a dedicated leasing consultant throughout your order by asking them exactly what lease car deals they recommend.

Follow these 5 tips for getting the best lease deal:

1) Choose a car that holds its value
2) Be flexible on term
3) Pay more upfront to have smaller monthly payments (although this is unlikely to affect the overall cost of the lease)
4) Correctly anticipate your mileage
5) Ask your leasing consultant for their top offers