Last updated: 23/07/2020 | Estimated Reading Time: 3 minutes
Leasing vs buying your next car
So, you’re ready to take the plunge and get a new car. If you afford to pay for your new vehicle upfront, then you should be looking for the best way to finance your new motor. There are a lot of pros and cons to both leasing and buying your car. Our comprehensive guide will help you choose the best option for you.
In This Guide:
Leasing a car
Leasing a car can be compared to a long term rental. You pay a monthly fee to use the car for the years and mileage agreed within your contract. This is known as personal contract hire (PCH) where you lease a car for a short period of time e.g. 2 years. You pay relatively low monthly repayments and return the vehicle at the end of your lease.
Pros of car leasing:
- You are able to drive a modern and up to date car for a fraction of the cost.
- The value of the car is not a worry to you. As you have leased the car, the decline of your vehicle’s value does not matter. You simply return it at the end of your contract.
- In some circumstances, the maintenance of the car will be included in the monthly fee, for example the road tax, insurance and servicing.
- Most of the time when you lease a car it is brand new and still under the manufacturer's warranty. So no need to worry about any expensive repair bills!
Cons of car leasing:
- You are unable to modify the car in any way without pre-agreement from the leasing company. For example, if you want to tint the windows you will have to get permission first.
- If travelling abroad you will need to check with the leasing company first. You might need to get written permission to do so and this will often come with a charge.
- In your contract, you will have a pre-agreed mileage. If you happen to exceed this mileage then you will have to pay a penalty. In most cases, this is 10p per mile. It doesn’t sound like a lot, but it will quickly add up! Make sure you consider how many miles you are likely to drive and are as accurate as possible.
- You will need to stay on top of your monthly payments to ensure it does not affect your credit score.
Buying a car
You can buy a car privately or from a dealership, giving you outright ownership of your vehicle. But buying a brand-new car will be expensive to begin with so make sure you shop around for the best deal.
- You own the car outright. This means you are able to adapt and change it as much as you want.
- Buying a car outright is cheaper in the long run.
- You will need to cough up a large amount of cash up front.
- The value of the car will decrease over time, leaving you out of pocket in the long run.
So should you lease or buy your car?
There are many pros and cons to both leasing and buying a car. You need to consider what is best for you financially and what you need in the long run. Make sure you are able to keep up with your monthly payments if you choose to lease a car. Compare car finance deals before signing up to make sure you get the most for your money!