Get to know the cost of leasing a car
The prospect of leasing a new car is pretty exciting. As car leasing companies act as independent vehicle brokers, they can give you access to, especially cost-effective leasing deals. Consequently, leasing means you can get hold of a car model that could otherwise be out of your financial reach. Here we will detail the cost of leasing a car
For example, you could benefit from Tesla leasing if, like 81% of motorists, you think electric cars are still too expensive. Similarly, leasing a car could enable you to benefit from automotive tech – like smartphone synchronisation and hazard detection – beyond what you had previously expected.
However, leasing a car still comes with a number of costs you must carefully heed. Here are those costs that would – or could – apply and how you should prepare for them.
A brief look at the fundamental costs of car leasing
In leasing a car from a finance company, you will agree to pay a certain monthly fee specified in the lease deal’s terms and conditions. You are also likely to be asked to pay a larger initial fee upfront – that’s the deposit. How much you pay overall will depend on factors such as:
- The brand and model of the car you choose
- The mileage limit you agree to
- The length of the lease period
The size of the monthly charge will be decided by calculating how far the chosen vehicle is likely to depreciate over the lease period. This calculation will take into account the vehicle’s residual value as well as the mileage you are estimated to clock up for every year of the lease.
The resulting figure will be divided by the number of months in the lease agreement. Once interest is added, you’ve got the monthly charge you will be expected to pay if you opt for this lease deal.
How you can cut the cost of car leasing
Car leases can vary significantly in length, with most of them lasting somewhere between two and five years. So, if you are particularly eager to keep up to date with what type of car you drive, you should think about going for a relatively short lease term.
If you are a little too adventurous with the lease term’s length, you could find yourself tied into the lease deal for much longer than you either want or need it. In any case, though, you could add a maintenance package to it to ensure you will be able to meet routine costs of servicing and repairs.
Usually, when leasing a car, you can also reclaim 50% of its VAT. Better still, you could be able to reclaim all of the VAT if this vehicle is used strictly for business purposes or mainly used either as a taxi or for driving instruction.
You should also be careful not to exceed the estimated annual mileage you would have approved when signing up for the deal. For every mile you drive past this limit, an extra charge will apply. With all of that considered, here’s to happy and financially responsible – driving!