Leasing a car usually looks straightforward on paper. You have a set monthly payment, a set term and once it’s completed, you hand the car back. That’s all right? Sometimes yes, but it’s not always as simple as this, and if you’re considering leasing a car, there are a few things you need to know about and understand to ensure it’s the right decision for you before you sign on the dotted line.
Mileage Limits
It is really important that you understand your mileage limits as per your agreement. When you lease a car, you need to understand mileage limits, a bit like when you set them for your insurance.
Going over the mileage on your vehicle can land you with a charge which could be anywhere from 5p to 30p per mile, and when you are facing this charge at the end of your lease agreement, it can be significant cost.
The way around this is to make sure you understand how many miles you will be driving on average each month and then align this with the agreement. You can alter this after the fact if your needs change, and this will then change the monthly payment you make.
Initial Rental
The initial rental cost is the payment you make at the start of the term. It’s not your monthly payments; it’s more like a payment to kick-start your payment plan. And it’s money you do not get back at the end of the term. It’s not a deposit. This payment can be three, six, or nine months’ worth of rental payments, and a higher initial rental payment can lower your monthly payments. But it’s not refundable in any circumstances.
Excess Wear Charges
Now, your contract will allow for certain wear and tear on the vehicle, le but there will be limits as to what is classed as fair wear and tear,r and the car will be inspected against BVRLA guidelines for a fair assessment. It’s a good idea to understand these yourself so you know what the lease company will be looking for at the end of the term.
Kerbed alloys, for example, or stone chips over a certain size and missing service stamp, for example, are not considered fair wear and tear and are chargeable issues you can expect to be billed for. The same goes for light scratches on bumpers, minor scuffs from supermarket carpark dings, and chips to the bodywork.
What The Monthly Payment Includes
When you’re looking at bmw lease deals, for example, you must understand what you are paying for each month.
The monthly payment on a lease is primarily made up of depreciation — the difference between a car’s value at the start of the contract and the end, it’s made up of a finance charge and the predicted residual value at the end of the contract
What it does not include is fuel insurance, breakdown cover, servicing tyres, etc., unless you take out a maintained contract to cover these things specifically.
This is important to know when assessing whether you can afford the monthly payments, as you will have other expenses you’ll be responsible for outside of the lease payment.
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