So you think you’ve found an amazing lease deal but how can you be sure you really are getting a great deal?

At Lease Beast, we’ve got a simple calculation to help you decide if that deal is really worth going for or not. You need to calculate a ratio called yearly cost to price. What it shows you is what percentage of the car’s total cost you will pay during each year of the lease. The lower the better!

** **

### Yearly Cost to Price Ratio

Cost to Price is calculated as the total cost of a lease deal per year, expressed as a percentage of the recommended retail price (RRP) of the car.

You can easily work it out by taking the total cost of everything in the lease including one off fees, divide that number by the number of years your lease is for. Take this number and divide it by the RRP and then multiply that number by 100 to get the percentage. Luckily, to make things even easier we have a calculator to help you!

YEARLY COST TO PRICE RATIO = (YEARLY COSTS/CAR RETAIL PRICE)*100

Just one word of warning: Sometimes the retail price of the car can be skewed as the car can be available with large discounts from a broker. It’s therefore always worth checking various brokers to see what kind of discount can be achieved.

### What makes a good yearly Cost to Price Ratio?

A lower yearly cost to price ratio is always better but generally, anything lower than 10% is a very good deal and should be considered. Anything above 15% is probably a little on the expensive side and it may be worth considering other options. Below is a simple table to help guide you.

THRESHOLD |
COMMENT |

< 5% |
Almost unheard of! |

< 7.5% |
Amazing deal, snap it up |

< 10% |
Very good |

< 12.5% |
Reasonable and worth considering |

>15% |
Fairly expensive, I’d consider looking around unless deals are rare |

### Yearly Cost to Price Ratio Example

So let’s look at an example.

** **

First look at all of the costs of a deal, this will include the following:

** **

- The initial rental or deposit
- Any admin or processing fees
- The total of all of the monthly payments you will make

So let’s take a look at the lease deal available on the market right now for a Mercedez C-Class convertible. It looks like a good deal right? Only £345 a month for a brand new convertible C Class! But let’s take a look and see if it’s really a good deal.

Taken from the table, the total costs of this deal are

** **

- The initial rental = £2,168.64
- Processing fee = £198
- Total payments = £361.44 x 24 months = £8,674.66

So the total costs are: £2,168.64 + £198 + £8,674.56 = £11,041.2

** **

But this is for a 2 year deal so divide that by 2 to get the yearly fee: £11,041.2 / 2 years = £5,520.60

** **

Next we divide this number by the OTR price of this car which is £41,234: £5,520.60 / £41,234 X 100 = 13.34%

Not bad! This is a pretty good deal, you pay just 13.34% of the total cars value each year. To be an outstanding deal you would look for it to be closer to 10% but it’s certainly a deal worth considering!