Leasing is a popular method for drivers to get behind the wheel of their dream car: the monthly payments are often more affordable than other forms of finance and it removes a lot of the stress of owning a car.
That’s why around 1.8 million people in Britain opt to lease a car, but it doesn’t mean the process is simple. You can check out our guide to the various ways to purchase a car here, but if you’re thinking about leasing, you’ll find the following jargon buster extremely useful.
This is pretty much standard for any lease deal, there will be an administration fee to pay, ostensibly to cover the effort of creating paperwork and getting the deal signed off. Make sure you ask up front what the admin fee will be, as they vary from company to company.
A broker’s job is to get you the best lease deal possible, as well as provide advice and guidance on the way. They do not work for the dealership or the leasing company, but they will get a cut of the deal. A good broker can be extremely helpful.
The term used to describe an individual, rather than a company, who offers leasing deals. These people are often operating outside of the law so best avoided.
It stands for the British Vehicle Renting and Leasing Association, and they oversee the leasing industry, upholding standards set out in financial law. They are on your side.
This the leasing contract you will need to sign before getting your car, and in it will be the length and monthly payment amount, as well as any other fees. You must check and check again to be sure you understand and are happy with the terms.
Everyone has a credit score and the higher it is the more chance you stand of getting a leasing deal and a favourable rate of interest. Before being offered a leasing deal a broker will run a credit check to make sure you’re eligible.
You’ll almost certainly have the chance to pay a deposit for the leasing deal, which will vary depending on your budget. The more you pay, the lower the monthly payments are likely to be. A lot of leasing deals can be made with little or no deposit, but the monthly payments will be higher.
Leasing companies will take into account the depreciation of the value of the car while you are in your contract terms, and it will affect how much you pay each month.
Your leasing deal will have a mileage cap built it: a limit on the number of miles you can drive during the lease period. If you go over the limit, you will be charged per extra mile, so make sure you are realistic about how many miles you drive before committing.
This is the term to describe the amount of acceptable wear and tear on the car caused during the lease deal, so you won’t be charged for it when you hand the car back. Any damage or wear beyond the stipulated amount will make you liable to a charge.
The FCA regulates the UK financial market and is there to protect you from rogue leasing companies or bad practices.
Not to be confused with the deposit, this is when the first payment towards your lease deal will be taken, so make sure you have the finds in your account.
This is the length of time with will take for your car to arrive. It normally only applies to new cars, which have to be built and fitted to your specifications, but it can take months, depending on the popularity of the car.
Many leasing companies will take your old car as part exchange to contribute towards your deposit on the leasing deal.
This is the calculated value of the car once the finance deal has come to an end, and it can affect your monthly payments. The more the dealership can sell the car for once it’s returned, the less they need to charge you.
Road tax - of the Vehicle Excise Duty – should be included in your leasing deal, which means it’s one less thing to worry about. It will be included in your monthly payments. The amount of road tax you pay depends on how much CO2 the car you are leasing produces.
Your paperwork should very clearly state how much in total you will pay over the course of the leasing deal.
As with most purchases, unless bought against a business, you will need to pay 20% VAT on the finance deal.