Car Leasing 101: What You Should Expect to Pay in 2022
Leasing a car is a beneficial alternative to commuting. You are provided with the luxury of having a vehicle without the financial commitment of actually purchasing one. It is cost-effective and is as simple as going online to find the deal for you.
Now that you know that leasing a car is a simple and cheaper option what does it all entail and how much does it actually cost? Review the costs of leasing a car here.
What am I paying for every month?
When leasing a car for however long you choose to do so. You are paying monthly installments to pay off the lease agreement. This is calculated and is dependent on the car you choose to drive, how long your lease agreement is set for as well as many other things.
Let us take a deeper look into what is included in your monthly payments. As mentioned before, your lease payments are dependent on the following:
#1: The Type of Car You Choose to Lease
The car you choose to drive is going to be the biggest factor in determining your monthly costs. The more luxury, the car is that you choose the more expensive your lease will be.
The type of car you choose is obviously going to affect your costs as this will determine how expensive or inexpensive it is going to be to repair in the event of damages or accidents made. The more expensive it is to maintain or repair, the more expensive your monthly costs will become.
A tip for reducing your payment in the event you choose a car that is more luxurious choose a later model or pay a bigger initial payment.
#2: The Size of Your Deposit
The initial payment acts as a deposit on the lease you are making.
#3: The Vehicle’s Depreciation
The amount the car goes down in value from the time you open the lease till the lease ends.
#4: The Mileage Allowance
The mileage rate for 2022/23 in the UK currently stands at 45p for 10 000 miles for business purposes. 25p for each mile after the initial 10 000 miles.
#5: The Length of Your Contract
The period in which you will be driving the car.
What do you need to pay upfront?
Your upfront costs include whatever it is you need to pay at the time of making the agreement. This includes the following:
#1: A Vehicle Reservation Fee
This is the amount charged for keeping the car for you until the first day your rental agreement starts.
#2: An Initial Fee
This as mentioned above is like a deposit that you are putting towards your monthly payments. The larger the amount you initially pay the less your monthly installments will be.
You may need to pay a delivery and pickup fee for the car but with Lease Loco the delivery and pickup are free of charge!
What do you need to pay during your agreement?
Once you have paid the initial payment you will start paying your monthly installments. You would also be required to pay a compulsory insurance fee for the car you choose. This will cover the car in the event of any damages or accidents made.
Paying for GAP insurance is important as it covers you in the event the car gets stolen or written off. This is because the insurance will only pay out the amount that the vehicle is currently valued and will not take into consideration the amount you have left to pay. This is where GAP insurance comes, where they will literally pay the “gap” that is still owed.
The leasing company also factors in the maintenance, repair, and servicing of the vehicle. Your lease agreement comes with a manufacturer’s warranty which can be for a shorter period than the actual lease agreement. In this event, you will need to cover the costs.
The most important factor added to your monthly installments will be fuel.
Cancellation fees are added in the event of you ending the lease agreement prematurely. Some service providers may offer a refund upon canceling. However, it is best to consult on this beforehand.
Conclusion
Leasing a car may seem like the best alternative, however, it does not come without its terms and conditions. Consulting with your leasing company and service provider about the terms and conditions of your lease is important. So that you know exactly what you are paying for.
For more information on leasing a car visit the Lease Loco website here.
