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What are you paying for within a lease?

The cost of your vehicle lease is based on a number of factors. Primarily, the amount you will pay stems from the depreciation of the vehicle, which is based on the age, mileage and expected condition of the car at the end of the term. But there are additional factors.

The cost of a lease comprises of:

Depreciation: 

This is the difference in the value of the car when it is new compared to its value at the end of the lease agreement. This cost is what forms the majority of the lease cost. It also explains the need for mileage and condition restrictions: as elements that are directly linked to vehicle depreciation there are additional charges if these conditions are not met.

It is part of our role as a leasing broker to negotiate the value of the vehicles we advertise; where possible reducing the gap between the price the funder is expected to pay for the vehicle and its residual value. By effectively minimising this depreciation cost for the funder, the smaller the monthly payment becomes for the lease holder.

Money factor:

Similar to conventional interest on loans, the money factor is the amount the agency funding the lease deal will charge for tying up their capital during the lease period. The leasing funder buys the vehicle from a dealership in order to lease it out to you, removing this figure from their assets. A sum is therefore incorporated into the total lease cost to account for this.

Whereas interest rates are dependent on the credit score of the individual taking the loan (with higher interest rates accompanying those with lower credit scores and who are therefore perceived to be higher risk) leasing costs are kept down because the application process is only passable by those with a good credit score. Money factor fees are therefore reflective of that minimal risk.

Commission:

This is a charge built into the cost of the lease that the leasing broker charges to cover the costs of advertising and negotiating the available lease deal with both dealerships and funders. Carparison advertise the commission we are making clearly on each deal detail page on our website and in each quote we supply.

In addition to the cost of the lease, it is important to consider these additional charges:

Processing fee:

This is a one off charge payable to us, your leasing broker. This £195 +VAT is to cover the administration costs involved in sourcing and arranging the lease deal for you.

Excess mileage charge:

You will be charged at the end of your term for every mile you have exceeded your cumulative mileage limit. This fee will vary but the exact fee for your lease vehicle will be available on your order documents and will be visible in your account. This will be billed by the funder of your deal and will be payable after you have returned the car.

Fair wear and tear:

All leases are subject to a standard set of guidelines regarding the condition expected for the vehicle on its return to the funder at the end of your lease term. Acceptable conditions do vary from funder to funder but all are regulated by the BVRLA’s fair wear and tear standard which includes small dents and scratches, for example. Anything exceeding this will either need to be repaired before collection, or will be charged by the funder on return of the lease vehicle.

When are my leasing payments taken?

1) Processing fee – before delivery can be arranged.

The first fee you will be required to pay will be our £195 +VAT processing fee. This is due when your order is placed and can be paid by debit or credit card over the phone to our administration team or via BACs payment.

2) Initial payment – 7 to 10 days after delivery

Your initial payment will be taken by direct debit 7 to 10 days following delivery of your lease vehicle.

3) Monthly payments –  a month following delivery

Your monthly payment will be taken by direct debit a month after delivery of your lease vehicle. This will be taken on the same day every month but you are able to call your funder and change this date if required.

4) Additional charges – once the lease car is returned to the funder

Additional charges for excessive damage or additional mileage will be billed by the funder after you hand your vehicle back to them.

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