1. What is a UK Car Lease?

A car lease in the UK (also called Personal Contract Hire or Business Contract Hire) allows you to use a vehicle for a fixed period while making monthly payments. At the end of the term, you simply return the car with no obligation to purchase.

2. How Does the Calculator Work?

The calculator uses standard UK lease formulas:

Where:

• \( Dep \) — Depreciation charge (£/month)
• \( Fin \) — Finance fee (£/month)
• \( MP \) — Total monthly payment (£)
• \( CC \) — Capitalized cost (vehicle price + fees) (£)
• \( RV \) — Residual value (estimated future value) (£)
• \( T \) — Lease term (months)
• \( MF \) — Money factor (interest rate expressed as decimal)

3. Understanding Lease Components

Depreciation: The difference between the car's initial value and its predicted residual value, spread over the lease term.

Finance Fee: The interest charge based on the money factor, applied to the sum of the capitalized cost and residual value.

4. Using the Calculator

Tips: Enter all values in pounds sterling. Money factor is typically between 0.001 and 0.003 (equivalent to 2.4%-7.2% APR). Residual values are usually 40-60% of list price for 3-year leases.

5. Frequently Asked Questions (FAQ)

Q1: What's included in capitalized cost?
A: Typically includes vehicle price, delivery fees, and any optional extras or packages you choose.

Q2: How is residual value determined?
A: Leasing companies estimate future value based on make/model, mileage allowance, and market trends.

Q3: What affects the money factor?
A: Your credit score, current interest rates, and the leasing company's policies.

Q4: Are there additional costs?
A: You may need to pay initial rental (3-6 monthly payments upfront), admin fees, and excess mileage charges.

Q5: Can I negotiate lease terms?
A: Yes, you can negotiate the capitalized cost (vehicle price), which affects all other calculations.