What affects the cost of a lease vehicle?

Certain factors affect the monthly payment on your lease: What are they?

With leasing, you can tailor every aspect of the deal to suit you and your needs.

Longer lease? Smaller initial deposit? More mileage? All factors you can customise to fit your requirements.

But here's the big question – how do these choices actually affect the overall price?

The way you tailor your lease will have a direct impact on your monthly payments.

While some elements – like annual mileage – will be fixed depending on your driving requirements, flexibility around other factors like term and model could save you some serious cash.

The first step towards getting the best car lease deals is understanding the ins and outs of car leasing.

Once you're aware of all the different factors that contribute to the cost of your lease, you can fiddle around and suddenly be able to afford a more expensive car – the stuff dreams are made of.

So, we've broken it down to help you understand how you can tailor your lease.

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

When you lease a car, you’re paying for the vehicle’s depreciation, rather than the overall price of the car. 

The depreciation is the difference in the cost of the vehicle at the beginning of the lease, compared to what it's worth when your contract ends. As higher-ticket cars have more value to lose, these will cost more to lease.

Here's the thing – cars that lose their value faster will hit your wallet harder each month than those that have a strong resale value.

The depreciation game explained

Understanding what the car you want could be worth two to four years down the line is a good starting point when you're shopping for the right lease deal.

In theory, a £50,000 car that's worth £30,000 after three years could cost the same to lease as a £25,000 one that depreciates to £5,000, with both cars losing £20,000 in value.

Opting for a car that holds its value, rather than a car that holds your heart, could make your monthly lease payments a lot lower. But we're here to try and tick both boxes.

A vehicle's depreciation depends on several factors including brand reputation, fuel economy, safety standards and whether it's the latest model.

Right now, electric and hybrid vehicles tend to depreciate less, as do SUVs and hatchbacks thanks to their growing popularity.

How does the lease term affect the lease price?

When you're searching for your perfect lease deal, you'll likely find contract lengths of either 24, 36 or 48 months.

Short-term lease deals of either 12 or 18 months are sometimes available, but these are less common.

The length of your lease will affect your monthly fee because the rate of depreciation changes over a car's lifetime.

Short vs long-term leases: what works best?

Vehicles tend to depreciate quicker in their first few years of ownership, and slow as the car gets older. This means that taking out a long-term lease contract can reduce your monthly fee.

For example, a BYD Dolphin lease on a 36-month lease currently costs just over £30 more a month than a 48-month lease.*

However, this isn't always a given, and there are times when the monthly payments can be smaller on shorter-term leases. This could be because there's a new model release due, or mileage thresholds, or because the deal is a special offer applied by the funder.

While you can customise all the lease deals we advertise on site, they'll always default to the lowest possible rate and the terms applicable to that.

Put simply, if a vehicle is cheaper per month on a 24-month contract – as with our current Ford Capri lease deal – you'll know about it.

*Price correct at time of publication

How does the initial payment affect the lease price?

You'll need to pay what's called an 'initial rental', which is essentially a non-refundable deposit, followed by a set number of monthly payments – much like with a phone contract.

The more you pay upfront, the smaller this monthly cost will be, and vice versa.

Working out your payment structure

The only factor affecting this is the fees that the funder applies to the lease. 

Although rare, some funders do increase their fees on leases when an initial rental payment is made, as this effectively increases the amount you're borrowing.

If bringing down the cost of your fixed payments is something that's important to you, then putting down more money upfront could save you money.

However, in most cases, the size of your initial rental can be decided based on which repayment structure that best suits you.

Your initial rental will be a multiplication of your monthly fee in increments of 1, 3, 6, 9 or, in some cases, 12. You can't request to invest an amount outside of these totals.

That's why you'll see lease profiles described as '9+23', or '6+35', or '3+47' etc. The first figure refers to the initial payment, and the second to the length of your lease, minus the first month.

For example, if your preferred lease profile is 9+23, and the monthly fee is £249, you would expect to pay an initial payment of £2,241 (9 x £249), followed by the 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, it would be £249 x 32 (9+23), meaning the overall cost is £7,968.

The actual length of the lease is also made clear – in this case it's 24 months. You're paying the equivalent of nine months upfront, followed by 23 months of normal 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.

Making sure you're as accurate as you can be about the mileage you'll cover during the lease will help to keep costs down. 

It'll prevent you from overpaying for your lease: either for miles you haven't used, or for charges on miles travelled beyond your contract.

Getting your mileage right

You'll be charged an excess mileage fee for going over your agreed limit, which can vary depending on your funder.

There might be the option to increase your mileage limit during your lease – but for this you'd need to contact your funder directly, and it could affect your monthly price.

When estimating your mileage, our recommendation is to calculate how far you travel during an average week and multiply this by 52.

It's good practice to add an additional 5% on top, to account for unplanned trips.

As with terms, special discounts can be applied to certain mileages which might mean you could have more inclusive miles for less money.

This'll be displayed on site because you'll 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.

On top of that, our dedicated – and if we do say so ourselves, phenomenal – Pricing team are constantly scouring the market and our dealer contacts for exclusive rates.

Sometimes this could be a negotiated discount on a committed batch of cars, while we also periodically pre-register vehicles to secure great rates.

Make the most of your leasing consultant – they've got the knowledge you need to get yourself the best deal, so be sure to ask them any questions you might have about your lease.

Remember these five 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
4. Be accurate with your annual mileage
5. Ask your leasing consultant for their top offers

Ready to put this knowledge to work?

Our leasing consultants are standing by to find you the perfect deal that ticks all your boxes – and fits your budget.

With our hassle-free online ordering powered by real people, you'll get expert advice you can trust.