How Leasing Works

The basic idea

When you lease a vehicle (the product is formally called contract hire), a finance company buys the brand-new vehicle you've chosen and hires it to you for a fixed period - usually 24, 36 or 48 months. You pay an initial rental at the start, then a fixed monthly rental for the remainder of the term. At the end, the finance company collects the vehicle and the agreement ends. You never own the vehicle, and there's no option to buy it at the end.

The magic is in what you're paying for. The finance company knows roughly what the vehicle will be worth when you hand it back (its residual value). Your rentals only need to cover the difference between the new price and that residual value - the depreciation - plus the funder's costs. That's why leasing a car often costs substantially less per month than financing the same car to own it.

The three numbers that set your price

1. Contract length. Usually 24, 36 or 48 months. Longer contracts generally mean lower monthly rentals, but you're committed for longer.
2. Annual mileage. You choose an allowance - commonly between 5,000 and 30,000 miles per year. Higher mileage means higher rentals, because the vehicle will be worth less at the end. Be realistic: an honest allowance up front is almost always cheaper than excess mileage charges at the end.
3. Initial rental. The upfront payment, usually expressed as a multiple of the monthly rental - 1, 3, 6, 9 or 12 months' worth. It is not a deposit and is not refundable; it's simply part of the total cost paid early. A bigger initial rental means smaller monthly payments, and vice versa.

Example: a "6+35, 8,000 miles" quote means an initial rental equal to six monthly payments, followed by 35 monthly payments, on a 36-month contract with an 8,000-mile annual allowance.

What's included in every lease

• The brand-new vehicle, built to your chosen specification and delivered free to your door (UK mainland).
• Road tax (Vehicle Excise Duty) for the duration of the contract, at the rate applying when the contract starts.
• Full manufacturer's warranty - typically at least three years, so most or all of your lease is covered.
• Free end-of-contract collection from your home or workplace.

What's not included

• Insurance. You must arrange fully comprehensive cover for the vehicle from delivery day. Consider GAP insurance too - ask us for details.
• Fuel or charging. That one's on you.
• Servicing, maintenance and tyres - unless you add a maintenance package (see below).
• Fines and tolls. Speeding and parking fines are your responsibility, and funders typically charge a small admin fee for processing them.

The maintenance decision

Every lease can be taken with or without a maintenance package - a fixed monthly addition that covers routine servicing, mechanical repairs not covered by warranty, and usually replacement tyres. Without one, you simply pay for servicing as you go, at a garage that uses manufacturer-approved parts.

Whether it's worth it depends on your mileage and appetite for surprises - higher-mileage drivers usually benefit most. Read our full maintenance guide, or ask us to quote both ways so you can compare.

Your commitments during the lease

• Pay the rentals. Failure to maintain payments may result in termination of your agreement and the vehicle being returned to the funder, and can affect your credit record.
• Service the vehicle on schedule to the manufacturer's requirements (whether or not you take a maintenance package) and keep it MOT'd if the contract runs past year three.
• Keep it insured fully comprehensively at all times.
• Look after it. The vehicle should come back in a condition consistent with the BVRLA Fair Wear and Tear guide - normal use is absolutely fine; damage beyond that may be charged. See our end of contract guide.
• Stay within your mileage - or contact us mid-contract if your circumstances change. It's often possible to amend the mileage allowance rather than face excess charges at the end.

Is leasing right for you?

Leasing suits drivers who want a brand-new vehicle, predictable costs and no ownership risk - and who can commit to a term and estimate their mileage. It's less suitable if you might need to exit early, your mileage is wildly unpredictable, or owning the vehicle outright matters to you. We'll always tell you honestly if we think leasing isn't the right fit - call us on 020 3161 7589 and talk it through.