In the UK, car leasing offers consumers numerous benefits, the biggest being lower monthly costs. But when you lease a car, several factors affect how much you will pay. In this article, we look at the top three elements that affect your monthly fee, namely mileage, maintenance and residual values, and what you can do to ensure you get the best car leasing deal possible.
Mileage
When you are on a car leasing website, one of the search criteria – or finance filters – is annual mileage. The lower the mileage, the cheaper the lease. But you need to be realistic here. It’s not going to help you to select a lower mileage allowance to reduce your monthly fee if you’re going to reach the maximum mileage six months into your contract. If you do that and go over the maximum mileage allowance, you will pay additional fees, which can be quite expensive.
To calculate an accurate mileage allowance, do the following:
- See how much you drive in a typical week – you can multiply this number by 45 to get a rough estimate as to how much you drive annually.
- Review your past driving habits.
- Accommodate any changes in lifestyle – for instance, if you have been working from home but might be returning to the office, it will greatly affect how much you drive.
- Check your annual MOT (Ministry of Transport) certificate online – the certificate logs the mileage from each test, allowing you to see your average annual usage.
Maintenance
Just because you’re leasing a vehicle doesn’t mean you’re completely absolved from all responsibilities when it comes to maintaining the car. As such, make sure you read and understand what is expected of you before you sign the contract. Most leasing companies will give you the option to include a service and maintenance plan, which will then form part of your monthly leasing fee. If you choose not to include it, the responsibility will lie solely with you to arrange and pay for all services. As such, the majority of people choose to incorporate this service into their monthly fee due to its convenience, as the leasing company will coordinate all arrangements with a reputable garage on your behalf.
Wear and tear is normal when driving a vehicle, which is why it is important to do the following in between services when the car is in your possession:
- Oil changes.
- Tyres – the condition of your tyres influences both safety and vehicle performance, so it’s important to regularly check their pressure and tread depth.
- Inside and out cleaning to protect the upholstery and paintwork.
- Regularly check for fluid leaks, brake condition, working lights, and address any unusual noises.
- Quick repairs – if minor issues arise, ensure they are promptly repaired, as they can quickly escalate into significant concerns that may be seen as neglect.
- Safe driving – this is considered an aspect of car maintenance, as reckless behaviour such as speeding, harsh braking, or driving too fast over speed bumps may lead to avoidable vehicle damage.
- Records – as the driver, it will be your responsibility to keep records of all service, maintenance and repairs.
Residual Values
The residual value is the projected market value of the vehicle at the end of the lease agreement. Factors that influence the residual value include the make and model of the vehicle, the brand’s reputation, reliability, mileage, condition, and the market demand. When you lease a vehicle, you will pay for the depreciation of the vehicle during the time you drive it. If you choose a vehicle with a higher predicted residual value, your monthly lease payment will be lower. So, you may pay more for a make and model from a reputable brand, but because it has a better residual value, it will bring down the monthly fees.
How It All Ties into Car Leasing
Mileage, maintenance and residual value play a significant role in car leasing agreements, which is why you need to do your homework and weigh up your options before you sign the contract. If you don’t go over your mileage allowance, keep the vehicle in great condition and choose a make and model that holds its value well, you can drive a top-of-the-range car at a much lower cost than if you were to buy it, making car leasing a fantastic option – especially if you like to drive a newer car every few years.
