How is the finance structured on a car leasing agreement with Creditplus?

Approved by the Car Finance Advisory Board

The way that the finance works on a car leasing agreement depends on the type of agreement you take on. Here at Creditplus, we offer three types of vehicle leasing agreements: Lease PurchasePersonal Contract Purchase and Contract Hire.

How does the finance work on a leasing agreement?

There are three main types of car leasing agreements, and the finance is structured slightly differently on each. To find out more about just how the finance is structured on the different leasing agreements, click one of the links below:

What is a Balloon Payment?

A Balloon Payment is a lump sum payable at the end of a car leasing agreement in order to take ownership of the vehicle. To find out more about what a Balloon Payment is, please visit our Car Finance Glossary of terms.

What is meant by ‘Residual Value’?

The residual value of a car is the predicted future value of a car which is calculated according to a specific set of factors including age and mileage. If you have more questions about how residual value affects your leasing agreement, read our dedicated help section.

I’ve seen car leasing agreements advertised as 3+36 terms. What does this mean?

For a car leasing agreement, it's usually standard to pay an agreed amount upfront. You'll see some leasing agreements advertised as 3+36 or similar to show the expected upfront payment and length of term. In this example, the equivalent of 3 months' payment will be paid as a deposit, and the term will be 36 months long. At the end of the car leasing agreement, provided the customer has satisfied all the conditions of the contract thus far, they will get a rent-free period – in this example that would be 3 months to match the 3 month deposit.

I don’t want to pay the upfront payment that is advertised – is there any flexibility?

Here at Creditplus we're flexible with the upfront payment; it can be changed dependent on your circumstances. Please be aware that changing the upfront payment will affect your monthly payments; the smaller the upfront payment, the higher the monthly payment. The upfront payment must be between one and six months, dependent on your credit file and circumstances. For Personal Contract Purchase and Contract Hire agreements, the maximum upfront deposit can be no more than 25% of the value of the vehicle.

How are the monthly payments calculated on my car leasing agreement?

Your monthly payments are based on a number of factors. The biggest of these is the difference between the value of the car at the beginning of the contract and the residual value or guaranteed future value. The smaller the difference, the lower the monthly payments. Other factors include interest, maintenance packages, road fund licence and more.

If you're still unsure about the car leasing agreements, or have a more specific question that we haven’t answered here, please speak to one of our Customer Advisors today using our LiveChat function, found on the right hand side of this webpage.

Published: 16/05/2016
Last Updated:31/01/2019
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If you require further assistance, our team of Customer Advisors are here to help. We're open six days a week - you can view our opening hours here - and we're more than happy to answer your questions.