How much does it cost to lease a car?

Leasing a car is one of the most affordable ways to get behind the wheel of the vehicle you want. 

Because you’re not paying for the full cost of the vehicle – as your payments only cover the car’s depreciation while you drive it – you can usually take advantage of lower monthly payments and don’t have to worry about high upfront costs. 

But, of course, there are still payments to be made. And before you decide to go ahead, you must find a car and payment that suits your budget and circumstances. 

Various factors determine how much your lease will cost; we like to group them into five areas, making it easier for you to generate an estimate. They are:

  1. The basic costs of leasing a car
  2. How you choose to pay
  3. The upfront costs of a car lease
  4. Bolt-ons and extras
  5. Suffering financial penalties

The basic costs of leasing a car

The cost of leasing is different for every vehicle. It’s not an exact science, but typically, it will not be more than £1,000-a-month or lower than £75-a-month.

how much does it cost to lease a car

It’s a large spectrum, but several factors are considered to determine how much a car’s monthly payments will be. 

The price of the vehicle 

Of course, one of the biggest factors is the price of the vehicle. Even though you’re not covering the cost of the whole thing, the more expensive the car you’re looking at, the higher your monthly payments will usually be. 

Your annual mileage

As a lease agreement is based on mileage, the more miles you predict to do each year, the higher your monthly payment.

Further reading: Lease mileage options guide 

The car’s GMFV

A car’s GMFV is what it’s expected to be worth at the end of your lease agreement – or its guaranteed minimum future value. 

A GMFV is important because it’s used to determine how much of the vehicle you pay for – as with a lease, you pay the difference between the car’s price at the start of your agreement and its GMFV at the end of it. 

A GMFV is determined by industry projections as well as how many miles you’re expecting to do. The fewer miles, the higher the GMFV because the car will be worth more – meaning you pay less. 

Your credit score

Your credit score also helps determine how much a car lease will cost. For example, if you have bad credit, you may face higher interest rates – as you’re more of a risk to the lender. 

And higher interest rates mean your monthly payment will be higher than if you had good credit and were offered low-interest rates. 

How you choose to pay for a car lease

Man driving car

A car lease is set up in a similar way to almost all other household bills. Before you get behind the wheel, you set up a direct debit guarantee. 

That then signals the start of your agreement. And each month, you’ll make a payment to your lender, which matches the pre-agreed sum on your paperwork. 

You’ll want to consider what type of card you use. For example, if you’re using a credit card to pay your lease, you might pay interest on the credit card as well unless it’s 0% purchase interest, so you’d be paying interest on the loan and the monthly payment. And if your credit card has a 20% interest rate, that’s a sizeable amount to add on per month.

However, the good thing about a lease is your monthly payment is always fixed, so you know exactly how much you’ll be paying and can budget accordingly. 

But remember, a lease is secured against the vehicle you’re driving. And you don’t own the car, so if you miss a payment, the vehicle may be repossessed. 

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The upfront costs of a car lease 

Deposit amount

Some dealerships and finance brokers require a deposit before you take your vehicle’s keys. 

Typically, this is the equivalent of three, six or nine monthly payments – which can be quite a sizeable sum.

It shows you’re committed to the deal and takes your monthly payments down. So, the bigger the deposit you put down, the lower your payments. 

But even though a bigger deposit lowers your monthly payments, not everyone has access to large chunks of cash, which is why we always provide a £0 deposit option.

It’s great if you don’t have a large chunk of cash handy; however, it does mean that you’ll be paying more monthly. 

Processing, reservation and admin fees

You’ll want to ask your dealer if there are any admin, processing or reservation fees at the start of the process.

It can be frustrating when you find your dream car and get accepted for finance to discover you need to pay to reserve the vehicle or pay a fee for the vehicle to be processed.

If you know this information upfront, you’ll be able to plan accordingly. At Zero Deposit Leasing, you’ll pay fees of £49.99 on a used car and £234 on a new car.

Bolt-ons and extras

Aside from a deposit – if you want to make one – any admin costs, and the potential penalties discussed above, there are no other mandatory charges – except for running the vehicle, e.g. fuel and insurance. 

Road tax is already usually included in your deal – or at least for the first year – however, you can choose to add extras to your lease plan to enjoy further stress-free motoring. 


You need to keep the car in good condition with a lease, including vehicle maintenance – servicing and MOTs – you must factor these charges into your budget before signing up. 

However, to take the stress away, you can include maintenance packages into your agreement with some vehicles. 

Car being serviced

That means that when it’s time for your car to be serviced, or if it needs an MOT, it’s already paid for. 

And as lease agreements are usually on new or nearly-new cars, the manufacturer’s warranty will likely cover any work that needs to be carried out – although that’s not inclusive, it’s important to check first. 

Further reading: Is maintenance on a lease vehicle worth it?

GAP insurance

GAP insurance is a way to make sure you’re not left with a hefty bill if your car is stolen or written off. 

If your vehicle was taken or if you suffered a total loss, your insurance company would only pay you what your car was worth on that day. They don’t take into account any outstanding finance.

And if what the vehicle is worth doesn’t amount to how much you owe, you have to cover the difference. 

However, that’s where GAP insurance can help. If you add GAP insurance to your plan, you can drive worry-free that if the worst were to happen, you wouldn’t have any added financial stress. 

That’s because GAP insurance covers the difference between what your vehicle is worth at the time of your claim and how much you owe on your lease agreement. 

You also have the option to add RTI to your GAP insurance, which stands for return to invoice. 

That means in the event of theft or total loss; it would cover the difference between your insurance company’s valuation of your vehicle and either how much the vehicle was worth at the start of your agreement or how much you still owe – whichever is higher. 


Although most vehicles still hold at least some of their manufacturer’s warranty at the beginning of the lease, it may not last the full term. 

That’s why you can choose to add a warranty to your lease agreement to avoid any unexpected costs – especially as the car gets older. 

Suffering financial penalties

If you choose to lease your next vehicle, it’s important to understand there are terms you need to keep to. If you don’t, you may face financial penalties. 


If you exceed your agreed annual mileage, you’ll face a pence-per-mile charge at the end of your agreement when you hand the car back. 

This is usually somewhere around 10p per mile, although it can be as little as 5p or as high as 30p. 

It may not sound like much; however, if you were to go 1,000 miles over your agreed mileage at a 10p per mile charge, you’d face a £100 penalty when you hand the car back. 

Mileage clock

It’s important to note, though, that even though it’s listed as annual mileage in your agreement, the mileage isn’t calculated until you hand the car back. 

So, for example, if you agree to do 10,000 miles a year and your term lasts four years, your allotted mileage is actually 40,000 miles over the length of your agreement. 

So, as long as you’ve done 40,000 miles or under when you hand the car back, you’ll escape a mileage penalty. 

With mileage, you’ll want to do your best to get it right, so you don’t have to factor it into your costs.

The car’s condition

When you hand the car back, it’ll be thoroughly inspected for damage. If there’s any bumps, scrapes or marks, you may face a penalty charge for the repair. 

The lender won’t expect the vehicle to arrive back in pristine showroom condition, which is why they’ll judge your vehicle by the fair wear and tear guidelines.   

However, you must return the car in the same state you received it, so if you’ve made any modifications – either performance or style – they must be removed before you hand it back, even if they add value to the vehicle. 

If applicable, the lender will also expect the vehicle to have been properly maintained with services and MOTs. 

It can be difficult to factor in wear and tear; accidents happen. But we’d advise having a read of your wear and tear guidelines and how much they cost to put right.

Early repayment charges

With a lease, your agreement is meant to last the entire term on which it was agreed. So, if you’ve signed up for a three-year lease, it’s meant to last three years. 

If you want or need to change your vehicle early, then you may face big early repayments charges and still have to cover the cost of the rest of your agreement.

Voluntary termination

While you have a legal right to terminate your hire purchase or personal contract purchase when you’ve paid 50% of it off, and it won’t cost you anything, you won’t get any money refunded if you’ve paid more than 50%.

You could be subject to an admin fee and will still face any penalties for excess mileage charges or unfair wear and tear.

Does it cost more to buy or lease?

Leasing is undoubtedly cheaper than buying in the short-term. 

You don’t have to make any big upfront payments, you can often drive a vehicle you wouldn’t otherwise be able to afford, and you only ever cover the cost of the car’s depreciation – so you never pay the whole cost of the vehicle. 

However, in the long-term, leasing can turn out more expensive than buying. That’s because if you jump from lease to lease, you never gain any of the money you’ve spent back. 

If you buy the vehicle, either in a lump sum or on hire purchase, you own the car at the end and then sell it on.

However, it depends on your circumstances. If you don’t have a large chunk of cash spare to buy the vehicle – and the vast majority don’t – then buying outright may not be possible. 

Also, monthly lease payments are usually cheaper than those through a hire purchase. 

And if you’re not bothered about owning the car outright, or you think you’ll swap it in a few years, you end up paying more monthly for the same thing. 

How do I know if I can get a lease? 

Finding out whether you’ll be approved for a lease deal is quick and simple, and it doesn’t harm your credit score. 

Check your eligibility to find out in minutes if you’ll be approved.

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