Car Leasing - The Basics
Are there any hidden costs with car leasing?
We don’t hide any costs from you!
But you’ve got to remember things like possible mileage cost. Let's explain.
When you lease a car part of the agreement is to say how many miles you expect to drive. This is stated as a mileage per year. It can be anything from 8,000 to 30,000. So over the three years of the contract you agree to drive a set amount of miles, let’s say 12,000 per year so 36,000 miles in total. But if you drive more than this there is a cost.
In the contract it will also state this cost. It’s usually 10p per mile. So if you drive an extra 1,000 miles per year, or 3,000 miles in total, you will need to pay 3,000 x 10p = £300.
Is this fair? Well yes it is because when you lease a car the amount you pay per month is linked to the value of the car when new compared to the end of the three years. And a large factor impacting on this value is the mileage. Think of the value of a car with 30,000 miles on the clock compared to one with 90,000 miles.
Another cost at the end of the lease can be to do with the state the car is returned in. The agreement expects there to be acceptable wear and tear on the car. But if there are big dents or severe scratches on the body work, or if the interior is really damaged in some way, the lease company may charge you. There is a degree of fairness in this and they will not charge for general wear, so if you look after the car, there usually won’t be a cost.
So these are not hidden costs but you need to be aware of them.