Setting a car budget is a fairly complicated task that requires you to think about a million things at once. Well, don't fret much longer! In this section, I've separated out the costs and dealt with them all individually.

So, take a look and get a handle on your budget. And if you have any questions, just drop me a comment and I'll get back to you as soon as I can.

An Overview of Car Leasing Payments

In this section, I take a high-level look at all the costs, fees and charges associated with car leasing. Generally, the easiest way to think of a car lease is as a long term rental agreement. You’ll pay a deposit and agree a fixed monthly payment in return for being able to use the car for a specific period of time.

The exact amount that you’ll pay each month will vary between different types of car lease and finance providers. However, with all deals, you’ll pay an initial rental then a fixed monthly fee for a set number of months.

Does Car Leasing Have Upfront Fees? And How Much Are They?

Like most finance methods, leasing has an 'upfront fee', in this case called an initial rental. This is different from a deposit because you're not actually buying the car.

With leasing, the upfront fee is calculated as a multiple of your monthly charge. In other words, you pay 3, 6, 9 or 12 months up front.

Unlike finance options like PCP and HP, putting down a larger up-front payment doesn't reduce the overall amount you pay. That's because a car leasing agreement is always for the same amount of money. Paying more upfront just means there's less to pay over the course of the contract.

Does Car Leasing Have Monthly Fees? And How Do They Work?

Once you take delivery of your car, you have to pay a set monthly fee to continue using it. You continue paying this fee every month until the end of your contract. Depending on what car you lease, your initial payment and your contract length, this can range from £100 all the way up to £2,500.

However, most monthly fees sit at around £100 to £500.

Does Car Leasing Have Any Additional Fees?

While car leasing is pitched as fixed-price motoring, there are a couple of extra fees that can surprise you at the end of your lease. The two big ones are excessive mileage and wear and tear.

  • Wear and tear: Finance companies expect a bit of wear and tear and include it in their fancy calculations for working out the depreciation of a car over time. The problems come when damage on a car exceeds fair wear and tear and starts to impact the value of the car. If you have caused excess damage to a car, you will have to pay to return it to saleable condition.
  • Excessive mileage: Same as the wear and tear disadvantage, really. If you tell your finance company that you’re only going to drive 10,000 a year and you actually drive 50,000, the car is suddenly worth less than the finance company thought it would be. As the person who drove the miles, you will be expected to make up the difference.

How Much Does Insurance Cost With Leased Cars?

One of the biggest (and yet most overlooked) is car insurance. And while leasing doesn’t specifically affect the cost of insuring a vehicle, there are some small ways that it can have an impact on the overall cost of your insurance. Also remember that you'll need GAP insurance, which covers the difference between what an insurer is willing to pay out and how much your finance company paid for the car.

How Do Repairs and Maintenance Work With A Leased Car?

All cars need repairs and maintenance throughout their lifespan and lease cars are no different. Since lease cars are brand new models straight from the factory, repairs are relatively straightforward. If it's covered by the warranty (for example, an engine fault), you get in touch with your leasing broker and tell them to get it fixed. If it's not covered by the warranty (for example, tyre wear), you have to pay for it.

Maintenance is a little trickier. Sometimes maintenance contracts are built into the leasing deal but not always. If it's included, just take your car to the garage your broker tells you to. If it's not included, you'll have to arrange it yourself. Watch out, though, as brokers sometimes specify where you have to take it.

How To Save Fuel While Driving

It was only when I started tracking my car budget, that I became aware of just how much money I spent on fuel. (A lot!) Since then, I've tried to improve my fuel efficiency through better planning and better driving. In this blog, I share a few ways that you can reduce how much you have to pay at the pump.

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