Leasing fees explained
Here is a breakdown of the different fees that are applicable when leasing a car, van or commerical vehicle.
The main cost of a lease comes from the initial payment and consequential monthly payments as agreed at the outset of the lease.
Other fees are agreed, others are ‘avoidable’.
The initial payment is a sum paid 7 - 10 days after delivery. It is a multiplication of your monthly rental in increments chosen by yourself at the outset of the agreement. These increments can be either 1, 3, 6, 9 or 12 and the more you pay in your initial payment, the smaller your monthly payments will be. The overall cost of the lease is not massively affected by paying more upfront. However, some funders do reduce their fees on the deal for bigger upfront payments as less money is consequently being borrowed.
Your monthly rental will be the amount you will pay for your lease vehicle each month for the duration of your agreed term. This figure will be clear from the outset of your agreement and includes the road tax for the vehicle at the prevailing rate.
The first monthly payment will be due a month after delivery of your lease vehicle. However, after your first payment this date can be changed with the funder as many prefer their monthly payment to fall either at the beginning or end of the month.
A processing fee is payable to the leasing broker to help cover the costs of sourcing, marketing and processing the lease agreement. Carparison charge a processing fee of £195 (+ VAT) which is payable by debit or credit card (we do not accept American Express) once finance approval has been received. If your application is declined we will not charge this fee.
Excess Mileage charge
At the start of the agreement you will have agreed to a set mileage limit. This figure will affect the monthly cost of your lease as it is inseparable from the depreciation value for your vehicle of choice. You will also be made aware of your excess mileage charge and this will come into effect for every mile above the agreed amount that you surpass when you hand the car back.
Excess mileage charges tend to vary between 3 – 24p. This means if your excess mileage charge is 8p and you exceed your limit by 1000 miles, you will be expected to pay an extra £80 at the end of your lease to cover the additional depreciation.
Maintenance packages are available alongside any lease car. Using the same payment format as the lease itself, i.e. an initial payment followed by monthly payments, you can cover the cost of maintaining your vehicle with monthly fees included within your lease. This can include everything from routine maintenance, tyre replacements and other wear and tear items.
Wear and tear fees
If you return your vehicle in a condition that is deemed worse than the standard laid out within the BVRLA fair wear and tear guide, you will be charged for these repairs. If you do damage your lease car it is likely be more cost effective to fix the damage before this inspection, as you are likely to be charged more from their chosen garage than you would when rectifying it before collection.
Was this article helpful?