Guide

What is the 1.5 rule when leasing a car?

Updated October 2026 7 min read Performance & Prestige

The 1.5 rule is a rule of thumb: a car lease is priced sensibly if the monthly payment is no more than 1.5 per cent of the vehicle’s list price. At a list price of one hundred thousand pounds, that caps the payment at fifteen hundred pounds a month. It is folklore, not regulation.

What does the 1.5 rule say?

Take the car’s list price. Multiply it by 0.015. If the monthly lease payment is at or below that figure, the rule says the deal is reasonable. If it is above, the rule says look harder.

That is the whole of it. There is no second clause, no adjustment for the length of the agreement, no allowance for what is included in the payment. It is a single ratio between two numbers, and its appeal is precisely that you can do it on a phone while somebody is talking.

The 1.5 version is the loosest of a family. The same folklore circulates as a 1 per cent rule, treated as the mark of a genuinely good deal, and a 1.25 per cent rule sitting between the two. In the version most often quoted, 1 per cent is excellent, 1.25 per cent is good, and 1.5 per cent is the ceiling above which you should ask why.

How do you do the sum?

Four list prices, and the monthly ceiling each version of the rule produces. Every figure below is illustrative arithmetic rather than a price anyone is quoting.

Monthly payment ceilings produced by the 1, 1.25 and 1.5 per cent rules at four illustrative list prices
List price (£)	1% (£)	1.25% (£)	1.5% (£)
50,000	500	625	750
100,000	1,000	1,250	1,500
150,000	1,500	1,875	2,250
250,000	2,500	3,125	3,750

Run it backwards and it becomes more useful. Divide the monthly payment by the list price, multiply by a hundred, and you have the percentage the agreement is actually running at. That number is comparable across different cars in a way a monthly figure is not, which is the one thing the rule is genuinely good for.

Where does the 1.5 rule come from?

Nobody can point to who wrote it down first. It appears in buying guides and forum posts rather than in any agreement, any lender’s underwriting criteria or any trade body’s published standard, and you will not find it named in a lease contract.

Its shape gives away its origin. A test expressed as a percentage of list price assumes a market where list price is the number everyone starts from, and where discounting is modest and broadly consistent. That describes a mainstream retail lease far better than it describes the prestige end of the market.

Treat it the way you would treat any heuristic with no author: useful as a first sort, worthless as a verdict. It cannot tell you whether an agreement is good. It can tell you that two agreements on very different cars are, or are not, priced in the same neighbourhood — and that is a real use.

What is the rule really measuring?

Underneath, a lease payment is mostly one thing: the value the car loses while you have it, spread across the months you have it for. Add the cost of the money and anything else bundled into the payment, and that is your monthly figure.

So the ratio the rule computes is, roughly, how fast the car is expected to lose value relative to what it cost, adjusted for how long you are keeping it. A car that holds its value well over a long agreement produces a low percentage. A car that depreciates steeply, or that is held for a short period, produces a high one.

Read that way, the rule stops being arbitrary. A figure above 1.5 per cent is not evidence of overcharging. It is evidence that the months you are buying are expensive months — usually because they are early ones, and depreciation is front-loaded.

When does the 1.5 rule apply?

It works best where all of the following hold, and it is the last of them people forget.

The agreement is long — two or three years, so early depreciation is averaged across many payments.
The car is mainstream, with a settled, well-evidenced residual value.
The list price is a real reference point rather than a starting position nobody pays.
You are comparing two quotes that match on term, mileage and what is included. If they do not match, the percentage is comparing two different products.

Where those hold, running the percentage across a shortlist is a quick and honest way of spotting the outlier. Where they do not, the rule will confidently point you at the wrong car.

When does it stop working?

On short agreements, first and worst. The shorter the term, the larger the share of steep early depreciation each payment has to carry, and the higher the percentage climbs — for reasons that have nothing to do with whether the price is fair.

On performance and prestige cars, second. List prices at this end move with options to a degree that makes a percentage of list a soft number, and residual values are far more individual than they are on a family hatchback.

On all-in agreements, third. If one payment covers delivery to your door and another covers collection from a site an hour away, the two percentages are not describing the same thing. The rule has no way to see a difference it cannot price.

And on any comparison where the mileage allowances differ. Miles are bought inside the monthly figure, so a quote with a bigger allowance carries a higher percentage while being, for a driver who needs those miles, the cheaper agreement.

What does it say about a short prestige lease?

That the percentage will read high, and that this is arithmetic rather than a markup.

Every agreement here runs on a three-month minimum term — one month up front, then one a month, with 1,000 miles a month included. The opening months are the steepest part of a prestige car’s depreciation curve, and a short agreement has very few of them to spread it across. A car kept for three years spreads that same early loss across thirty-six.

You can run the sum yourself once you have a figure, and on a car from our own fleet that figure is confirmed on enquiry. What you should not do is compare the result with a three-year contract-lease quote and conclude that one of them is mispriced. You are comparing the earliest months of a car’s life with thirty-six averaged ones.

What to check instead of a percentage

Four numbers, and between them they answer the question the percentage is standing in for.

Total across the minimum term. The monthly figure multiplied by the term. The initial payment is the first of those months rather than an addition to them, so the profile does not change the total.
What the payment includes. Delivery, collection, the mileage allowance, anything else. Two quotes rarely include the same set.
The mileage allowance, against your real mileage. Buying miles inside the quote is cheaper than buying them afterwards.
What leaving early costs. The number nobody asks for at the start and everybody wants at month four.

Those four are comparable between suppliers. A percentage of list price is not, unless everything else already matches — in which case you did not need it.

Common questions

Do UK leasing companies use the 1.5 rule?

Not as a pricing method. A lease is priced off the vehicle’s cost, its expected value at the end of the term, the length of the agreement, the mileage and the cost of the money. The percentage is something a buyer computes afterwards, not something a lender works to.

Should the sum use list price or the price paid for the car?

The rule as it circulates uses list price, which is also its weakest point. Where a car is routinely discounted, list price flatters the ratio; where it is not, it does not. If you know the real transaction price, that version of the sum tells you more.

Does a higher percentage mean I am being overcharged?

No. It usually means the months you are buying are expensive months — a short term, an early-life car, or a great deal included in the payment. Overcharging shows up when two genuinely comparable quotes on the same car differ, not when one ratio sits above a number from a forum.

Is there an equivalent rule for the initial payment?

None with any currency. Initial payments are quoted as a multiple of the monthly figure rather than as a percentage of anything, which is why the trade writes them as profiles — 1+2, 6+23, 9+23. The multiple is the number to compare.

Can I apply the rule to a car you would source for me?

You can once there is a figure to apply it to. Every car on this site is quoted rather than listed, so the monthly figure arrives with the quote. On a car arranged through a vetted partner that figure comes back from the partner; on a car in our own fleet it is ours to confirm, which is why it comes back faster and firmer.