Costs to Consider with Personal Leasing

Any sort of finance always involves considerations, and leasing is no different. Understanding the various costs involved is essential to ensure leasing is the right option for you.

Beyond the upfront rental and monthly rentals, there are a few other costs to consider, like excess mileage charges, maintenance, and insurance costs.

Let's delve into the costs associated with leasing, empowering you to navigate the leasing process confidently and ensure you're fully prepared for the financial commitments ahead.

Here is a brief summary of the main ones:

• No guaranteed option to buy the car: You can only request to buy it at the end of your lease 

• Excess mileage charges: Charges will apply if you go over your agreed mileage allowance. 

• No major modifications: As you don't own the car, you won't be able to make a lot of amendments to it. 

• Damage charges: These might apply if you have damaged the car beyond what is classed as fair wear and tear. 

• Early termination fees: Will apply if you want to come out of your lease early. 

• No hire or reward: You cannot use a lease a vehicle for delivery driving or taxi. 

No guaranteed option to buy the car 

When you lease a car, it's a bit like renting a house (except most cars lose value, whereas a house usually gains it) – you enjoy it while it’s yours, but you don’t get to keep it. At the end of your lease, buying the car isn’t a given. You will be able to ask to buy it, but there’s no guarantee the leasing company will say yes. 

Excess mileage charges 

Leases come with a set mileage allowance, and if you exceed it, you’ll face excess mileage charges. Think of it as a data plan for your phone – go over your limit, and you pay more. But don't worry, they're usually only pence per mile and you can increase your mileage during your lease if you haven't quite got enough. Plus, you'll know exactly what the charge is from the outset.

No major modifications 

Small changes, like tinting your windows or dechroming your car are usually fine. But, since the car isn’t yours, you can’t make major changes. Again, like renting a house – you can’t knock down walls or redo the kitchen without permission. 

Damage charges 

If you return the lease car with more than just the usual wear and tear, you could be hit with damage charges. This can include things like scratches, dents, and chipped alloys, or it could be down to poor maintenance at an unapproved garage.  That said, the lease company is expecting a used car back at the end of your lease, so it hasn't got to be pristine.

Early termination fees 

Life can be unpredictable, and you might need to end your lease early. Unfortunately, doing so isn’t free. You’ll likely face early termination fees, which can be quite hefty. As a rule of thumb, you'll be charged 50% of the remaining rentals, although this does vary depending on the lease company.  

No hire or reward 

Planning to make some extra cash by delivering parcels or driving as a chauffeur? Leasing might not be the way to go. Most leases don’t allow you to use the car for hire or reward, meaning no Uber, delivery jobs, or driving instructors. It’s something to consider if you’re looking to supplement your income or indeed if that is your main job. 

Of course, there are other costs you need to take into account, like maintenance and insurance, but that is the same whether you lease or not.

In essence, while leasing has its perks, it also comes with a few strings attached. It’s important to weigh these factors against your lifestyle and driving habits to see if leasing or buying is the best fit for you.