How Does Leasing a Car Work?

Car leasing works by renting a brand-new vehicle for a fixed time, usually 2-4 years. Make your initial payment and then monthly payments until your contract ends. Car leasing often works out cheaper than buying as you only pay for the time you use the car.

What does car leasing mean?

Car leasing is an agreement to loan a vehicle for a set amount of time, in exchange for an upfront payment and fixed monthly fees. You do not own the car, and the car is returned to the lease company at the end of the agreed lease period.

What are the benefits of leasing a car?

Here are some of the key benefits of leasing a car:

• Fixed monthly payments, allowing you to pay a set amount within your budget that won’t change during the agreed lease period

• A range of available vehicles means you can choose a make and model to fit your budget

• No need to worry about the risk of depreciation of the vehicle, with no concerns about its re-sale value

• The length of the lease means you can enjoy the benefits of a brand-new vehicle every few years

• Optional maintenance packages are available to help take away the worry of costly services and repairs

• The down payment required at the start of lease is often lower than a deposit for purchase financing

What does leasing a car include? 

Road tax forms part of your lease agreement, so there’s no need to set up separate payments to ensure your vehicle is legally entitled to be on the road. maintenance packages to help keep your lease vehicle road worthy are available as an optional extra.

You are responsible for setting up an appropriate car insurance policy, and this will need to be arranged before you take possession of the car. 

What to know when leasing a car 

Prior to agreeing a lease deal, you should make sure that you have the following key information:

• Contract length: Contracts last between two and four years. Make sure your contract is affordable for your budget and right for your circumstances

• Budget: Set a budget limit beforehand, so you can choose a vehicle that fits within this amount

• Mileage allowance: Your contract will state how many miles you’re allowed to drive each year without incurring an excess mileage charge. It is important to check this, and decide whether it will cover your expected mileage. You can often agree to pay a higher monthly fee in exchange for an increased mileage allowance.

• Down payment: The amount you have to pay before the lease begins

What is the criteria for leasing a car?

Not everyone is eligible to lease a car. For your application for car leasing to be successful, you will need to meet the following criteria:

• Age – you must be at least 18 years old to lease a car
• Driving licence – you must have a full and valid UK driving licence
• Credit score – you must also have a good to excellent credit score

Learn how car leasing works with our complete guides

Our leasing process guides are informative and easy to read, giving you a full overview of how personal car leasing and business car leasing work in the UK. Find out everything you need to know about how car leasing works, so you know which deal is right for you.

The guides in this section cover leasing costs, options for maintenance, insurance and what happens when your leasing agreement comes to an end.

Whenever there is a change in the leasing process, we update our guides or create new ones. However, if there are guides you would like to see us produce, please let us know!

How Much Does Car Leasing Cost?

What is a Maintenance Package?

Working Out the Total Cost of Ownership

Initial Rental Explained

Getting a Good Deal on a Car Lease

Choosing Your Fuel Type

Emissions Tests Explained

Insuring a Lease Vehicle

Car Leasing Fair Wear and Tear

Putting a Private Plate on a Lease car

What does Pre-Registered mean?

The End of Lease Process

Terminating a Lease Agreement