Would leasing a car make more financial sense than buying one? There’s a lot of things to consider when you’re trying to decide between buying and leasing your next vehicle. Really, it comes down to personal preference and requirements, but there are some factors that can help you decide.
Here, we’ll compare buying and leasing a car and the top things to consider before making a decision.
Buying Vs Leasing – Which is more practical?
Despite how popular leasing has become in the UK, it’s still often better to actually buy a vehicle. This is because with leasing, the car is never actually yours (unless you choose a hire purchase agreement), so there’s typically restrictions placed upon the use of the vehicle including the number of miles you can do. So, if you tend to drive quite a lot, this could become a problem.
When you buy a car, you’re also free to sell it whenever you choose. With leasing on the other hand, you often need to pay an early exit fee to accommodate for the interest the company will lose.
There’s also the fact that you’re free to make any modifications to the car if you buy it. If you lease it, you’ll have to ensure you take especially good care of the car; especially if you have kids. So, in terms of practicality and convenience, buying is a better option.
Which is the cheaper option?
OK, so what about the all-important cost? It all depends upon your personal finance situation. Buying a car is obviously more expensive in the short term. You’ll need to come up with potentially thousands of pounds to pay outright, then there’s the cost of tax, any repairs which could crop up and fuel costs.
Leasing in the short term can be really affordable. The deposit you have to put down can be really low, and the monthly repayments are affordable. However, you’ll typically be paying more back in the long-term due to added interest. You’ll also be held responsible for any damage to the car which isn’t considered to be normal wear and tear.
Whichever option you choose, you’ll still be responsible for paying your own insurance. Many people mistakenly believe the lease company pays insurance for them – they don’t! So, you’ll need the legally required types of insurance and it’s also recommended if you buy a car, you invest in GAP insurance too. This accounts for any difference between how much you paid for the car and what your insurer is willing to pay out in the event the car needs to be written off.
So, in the short-term leasing makes more financial sense, but over the long-term it does usually work out more expensive than buying.
Overall, there’s a lot to consider before deciding whether you should buy or lease a vehicle. As you can see, there’s clear pros and cons to both options and it’s important to compare the two thoroughly before making a decision. Researching the crucial elements behind finding the best deal can take time so be sure to give yourself plenty of room for scope and you should be on your way to finding the best finance deal for your car.