When it comes to leasing a car, things can get confusing. Particularly when it comes to paperwork, knowing what you need to have on hand when setting up a new lease agreement can feel daunting, but having a better understanding of the whole process can make things much easier.
In this guide, we’re going to take you through everything you need to make sure that the car leasing experience is as hassle-free as possible, so you can get behind the wheel of that new car in no time at all.
Before you apply: required information and documents
Before applying for a lease agreement, you will need to gather some key information and potentially some documents.
First off, you’ll need a form of identification. This could be a driver’s licence or a passport. Since the lease is for a car, having a valid driver’s licence is particularly important.
You may also need to provide proof of your current address. This could be a recent utility bill, or a recent credit card statement – these will have had to be issued within the last 90 days to be accepted. As part of the application process, you will be asked to provide your address history for the last five years, but you do not need to provide physical proof of this history.
In addition, you’ll need to provide details of your current employment and your monthly income, alongside your key areas of expenditure each month, such as a mortgage or other large finance payments. Lenders will carry out a credit check which will usually verify your income, but you should be aware that this process will leave a search footprint on your credit file. You may be asked for payslips after your initial application if the funder requires further confirmation.
You’ll need to let lenders know about your marital status, too, and, of course, you’ll have to give the details of the bank account that you’d like to make the payments from.
Business leasing specific requirements
The documents required for a business lease are slightly different to those for a personal one. You’ll still need to provide identification such as a passport or a driving licence, but you’ll also need to include details about your company’s annual turnover. This information can often be retrieved by the funder from Companies House. You will also need to provide information about the company’s directors and its registered address, too.
If your company pays VAT, you’ll also have to provide the business registration number. Again, speak to the AA Lease team if you’d like more information about business leasing.
The main agreement: understanding your contract
There are many key elements to look out for in your signed lease agreement, so make sure you’re happy with all of the terms you’re looking at before signing on the dotted line. Let’s take a look at the key areas to check out.
Contract length
The length of your contract is pretty self-explanatory. This focuses on the length of the agreement, but it’ll also show you how many payments you’ll have to make before the end of the contract.
This can be useful for budgeting, as you’ll be able to see how much you’ll be paying and for how long. Remember, you’ll need to make sure that you can make all of the payments for the length of the agreement, or risk the car being seized and a negative impact on your credit rating.
Initial payment
An initial payment - sometimes referred to as the deposit - is a set amount that you’ll pay at the start of a contract. It’s usually calculated by taking a number of monthly payment amounts and combining them.
For instance, you might have to pay three months’ worth of monthly payments as your initial payment, but this does vary between agreements - so check first.
Arrangement Fee
In addition to your initial payment, an Arrangement Fee (or administration fee) is a one-off payment you will need to make. This fee is payable online once your order has been officially processed and confirmed by the funder, but before the vehicle is delivered. This covers the costs associated with setting up your lease agreement.
Monthly payments
Your monthly payments will be, as the name suggests, what you’ll be paying each month. These payments are fixed, and they are made through direct debit, so there’s little to do each month in terms of transferring the funds across to the leasing provider.
When it comes to the payment date, this will typically be on the anniversary of the delivery date in the following month. While some funders may allow you to choose a payment date, this is not always the case, so confirm this with your provider.
Annual mileage allowance
Your annual mileage allowance is how far you’ll be permitted to drive the car each year without incurring additional costs. It’s worth thinking long and hard about this, too, as it’ll affect how much you’ll pay each month.
However, underestimate your mileage and you could face additional charges. On most agreements, you’ll have to pay a set amount for each mile you travel over the pre-agreed amount.
Maintenance and servicing
It’s important to note that most leasing agreements do not include maintenance and servicing unless you specifically select a maintained agreement. However, all new vehicles come with a standard manufacturer’s warranty. The details of what is covered will be outlined in your agreement.
It’s worth paying close attention to this area, as you’ll have to rely on the warranty or your selected maintenance package if there’s an issue with the car you’re leasing.
Fair wear and tear
Fair wear and tear refer to areas of the car that will, inevitably, degrade over time. Usually, this covers aspects such as the tyres and brakes, which will naturally wear out as a car is driven.
However, some wear and tear clauses might also include areas of the cabin. Double-check this, as anything caused outside of that wear and tear agreement could result in additional charges that you’ll have to pay at the end of the agreement. The BVRLA provide a fair wear and tear guide that explain more about this.
Early termination clauses
Early termination is just that - a cancellation of an agreement before its pre-agreed end. In most agreements, you’ll have to pay a fee in order to exit it early, so double-check this to make sure you’d be happy with the amount if you needed to leave the agreement before that agreed-upon date.
No ownership option
With leasing, there is no option to purchase the car at the end of the agreement. Once you’ve finished all of your payments, you simply hand the car back and you can either walk away entirely or start a new agreement on a new car.
Vehicle Collection and Handover
At the end of your lease, the vehicle will be inspected upon collection. You will be asked to sign a document to agree on the condition of the vehicle as noted in the inspection report. There is no official 'end-of-lease agreement' or 'post-agreement documents' to sign beyond agreeing to the collection report.
FAQs
What if I have bad credit?
Having bad credit doesn’t mean you’ll automatically be declined for finance. There are some options available, though it could be a good idea to also think about ways to improve your finances. Making sure you’re on the electoral roll is a key - and simple - way to improve your credit right away, for instance. However, if you have any concerns, then speak to the AA Lease team, who will be able to advise you on the best option for you.
Can I use a utility bill from my mobile phone provider?
Unfortunately, most leasing providers do not accept a mobile phone bill as proof of address. Accepted documents usually include bank statements, utility bills such as those for water or gas, or recent credit card bills. These must typically be dated within the last 90 days.
When do I need to send my documents by?
The process of finalising your documents and contract is typically handled quickly using e-signature technology. You’ll need to complete and return all required documents and ID copies prior to the car’s delivery. This timeline often depends on the expected delivery date of the car itself, so it’s worth speaking to your leasing consultant about this date and when to send your documents over.
Do I need to send hard copies?
The good news is that we typically handle everything digitally, so scanned copies of documents and IDs are generally acceptable for the application process. This allows for a much quicker turnaround. While you may occasionally be asked to show an original for certain items, clear, legible scanned copies are usually sufficient. Speak to the AA Lease team if you’ve got any questions about the required format.
Conclusion
So, there we have it - everything you need to know about the paperwork required for leasing. With the right information to hand, leasing a car can be straightforward and hassle-free, turning the process from something daunting into one that feels second-nature.
If leasing sounds like the right option for you, then AA Lease could help you. We can get your application started, find the right car for you and everything else in between, but if you have any questions or want to browse our latest lease deals, head to AA Lease today.