A clear UK guide to lease purchase costs, deposits, mileage limits, fees and alternatives, with typical prices, examples and practical steps to budget and compare deals confidently.
Headline - what you will learn in minutes
Understand typical monthly payments, deposits, mileage limits, insurance and end-of-term fees for lease purchase car finance in the UK, and how it stacks up against HP, PCP and paying cash.
Understanding APR is not just about percentages - it is about what you will pay in real pounds over time.
Why this matters right now
Lease purchase can look affordable on the forecourt, but the real cost depends on deposits, mileage and contract length. We break down the numbers UK buyers face so you can budget with confidence and avoid avoidable fees.
Who should read this
If you are comparing finance options for your next car, want predictable monthly costs, and prefer lower upfront outlay, this guide is for you. It suits UK drivers weighing budget hatchbacks against premium models, new versus used cars, and anyone who needs clarity on deposits, mileage charges and total cost over the term.
The finance language decoded
Lease purchase: A fixed-term contract where you pay an initial deposit and monthly payments. You do not typically own the car at the end unless you settle separately. End charges may apply.
Deposit: Usually 3-9 months of payments. For UK deals this often sits around £700-£2,500+, depending on the car and credit profile. A higher deposit lowers monthly payments but not the overall cost.
Monthly payment: Typically ranges from about £100 for entry-level hatchbacks to £1,000+ for premium models. Price depends on make, model, term and mileage allowance.
Mileage allowance: Commonly 6,000-12,000 miles per year. Higher allowances increase monthly payments. Exceed the limit and you will pay 10-20p per extra mile.
End-of-term charges: Fees for excess mileage and damage beyond fair wear and tear. These can add hundreds of pounds if unmanaged.
Comprehensive insurance: Mandatory. You must arrange cover before delivery. Premiums vary by car, driver and postcode and should be budgeted alongside monthly payments.
Credit check: Providers assess your profile. Better credit usually means lower deposits, lower monthly costs and more choice of deals.
Contract length: Often 2-4 years. Longer terms reduce monthly payments but increase your commitment and potential exposure to fees if you end early.
Your choices at a glance
New vs used lease purchase
- New cars - higher monthly payments and deposits, latest tech and warranty, faster depreciation priced in.
- Used cars - typically lower monthly cost and deposit. Example: a used BMW 1 Series around £175 per month with a £1,577 deposit versus £250 per month and £2,255 deposit for a new model - a potential multi-thousand pound saving over 48 months.
Mileage tailoring
- Low mileage drivers can keep payments down with a 6,000-mile cap.
- High mileage drivers should pay for a higher allowance up front to avoid 10-20p per mile excess fees.
Premium vs budget segments
- Budget hatchbacks can start near £120 per month with a modest deposit.
- Premium badges like Audi, BMW or Tesla can exceed £1,000 per month. The step up reflects depreciation and specification.
Comparing finance paths
| Option | Ownership at end | Typical upfront | Monthly cost | Total cost signal | Flexibility |
|---|---|---|---|---|---|
| Lease Purchase | Usually no ownership | 3-9 months deposit | Lower vs HP on same car | Around £9,200 over 2 years for a used car example | Medium - early exit fees likely |
| PCP | Optional final payment | Deposit plus fees | Often competitive | Around £8,696 after settlement scenario | High - change cars easily |
| HP | Ownership after final payment | Higher deposit possible | Higher monthly vs LP | Varies, often higher monthly burden | Medium |
| Cash | Immediate ownership | Highest upfront | No monthly | About £4,376 net over 2 years after resale example | High |
Used lease purchase can materially cut monthly costs compared with new - but you still need to watch mileage and end fees.
Pounds and pence - what it really costs
- Monthly range: Roughly £100 to £1,000+. Most UK drivers land between £120 and £450 depending on car and term.
- Deposit: Typically £700-£2,500+. Equivalent to 3-9 months of payments. Bigger deposits reduce monthly payments but not the true total.
- Mileage: 6,000-12,000 miles per year is standard. Exceeding the cap costs 10-20p per mile, which can add hundreds by contract end.
- End charges: Excess mileage and damage fees can materially lift the final bill. Budget a contingency.
- Insurance: Comprehensive cover is mandatory. Add premiums to your monthly affordability check.
- Total cost comparisons: A used car lease purchase over two years can total around £9,200 in one common scenario. Paying cash can net around £4,376 after resale, while HP or PCP can come in near £8,696 after settlement. Figures vary by car, deposit and mileage.
Standout point: a longer term lowers monthly payments but keeps you committed for longer and can raise your overall exposure to running and end fees.
Can you get approved - and on what terms
What lenders check:
- Credit score and history - stronger profiles usually secure lower deposits and monthly rates.
- Income and affordability - stable income and realistic budgets matter.
- Vehicle profile - premium models and high mileage contracts cost more and are assessed accordingly.
Ways to improve terms:
- Check and clean up your credit file before applying.
- Right-size your mileage allowance to your real driving pattern.
- Consider a used model to cut monthly payments.
- Be flexible on contract length. 2-4 years is common; pick the shortest term that fits your budget.
No-deposit options exist for excellent credit - expect higher monthly payments. Early termination typically incurs fees, so choose carefully at the outset.
From showroom to driveway - the steps
- Set a monthly budget including insurance and fuel
- Check your credit score and correct any errors
- Decide mileage allowance based on last 12 months
- Compare new vs used offers on similar models
- Choose contract length that fits your plans
- Confirm deposit and total estimated cost in writing
- Arrange comprehensive insurance before delivery
- Inspect the car and document condition at handover
Upsides and trade-offs
Pros:
- Lower upfront outlay than cash or some HP deals
- Predictable monthly payments for budgeting
- Choice across budget to premium segments, new and used
Cons:
- No ownership at contract end - no resale value
- Mileage caps and 10-20p per mile excess fees
- Possible end-of-term damage charges
- Early termination penalties reduce flexibility
Tip: photograph condition at start and end to protect against unfair damage claims.
Avoid surprises - read the small print
- Mileage accuracy matters: understate and you will pay later. If you drive 10,000-12,000 miles a year, select the higher tier.
- Deposits reduce monthly payments only - they do not cut the underlying total cost materially.
- Confirm all fees: admin, delivery, documentation and potential return charges.
- Keep the car serviced on schedule and within the fair wear and tear guidelines.
- Plan for insurance - comprehensive cover is mandatory and price varies widely by model and postcode.
Budget for end-of-term costs upfront. A small contingency can save a big headache.
If lease purchase is not the fit
- PCP: Lower monthly payments than HP, option to hand back or buy via a final payment. Good for regular upgrades.
- HP: Higher monthly payments but ownership at the end, no mileage caps.
- Cash: Highest upfront, lowest total cost over time if you buy well and sell sensibly.
- Personal loan: Fixed rate, you own the car from day one and can sell at any time.
Quick answers to common questions
Q: What are typical monthly payments in the UK? A: Around £100 to £1,000+. Entry-level deals often start near £120 with an appropriate deposit.
Q: How much deposit will I need? A: Usually 3-9 months of payments, commonly £700-£2,500+. Larger deposits cut monthly costs but not the true total.
Q: What mileage should I choose? A: Match last year’s driving. Standard bands are 6,000-12,000 miles per year. Excess is usually 10-20p per mile.
Q: Do I own the car at the end? A: Typically no. Lease purchase usually does not provide ownership or resale value at contract end unless separate settlement applies.
Q: Are used cars cheaper to lease purchase? A: Generally yes. Used examples often show materially lower monthly payments and deposits than new equivalents.
Q: Is insurance included? A: No. Comprehensive insurance is mandatory and must be arranged before delivery.
Your next moves
- Set a realistic monthly budget including insurance and a contingency for end fees.
- Get quotes on new and used versions of the same model with 6k, 8k and 10k mileage bands.
- Compare total cost across lease purchase, PCP, HP and cash using the same assumptions. Save the quotes for like-for-like comparison.
- Choose the shortest term that keeps payments comfortable.
Small print you should know
This guide is general information for UK consumers and is not financial advice. Costs and availability vary by provider, credit profile and vehicle. Always read the contract, confirm fees in writing and consider advice tailored to your circumstances.
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