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Leasing V’s Purchasing – What Is The Best Option For Me?

Byorigamifox

Leasing Vs Purchasing – What Is The Best Option For Me?

When the time comes to change your existing vehicle or even if you are a first time car buyer, looking at the different options available can seem rather daunting. That’s why we have put together this guide to help you to understand the differences between Leasing Vs Purchasing the right vehicle for your needs.

Leasing

Leasing is really just a long term rental of a vehicle. You keep the same vehicle for the length of the Leasing Agreement which is usually 2 or 3 years. You pay a fixed monthly cost. It is becoming more popular in the UK and maybe this is down to the fact that people don’t like depreciation. As we know when you buy a brand new car, often they lose more than half their initial value after the first three years of ownership. The depreciation tab falls to the leasing company, but of course this is factored into the costs of Leasing.

Points to Consider Before Leasing A Vehicle

  • You can often Lease a more prestigious car than you could purchase through a Finance Agreement.

  • The monthly payments for Leasing a vehicle tend to be lower than if you purchased a car on finance. However, the overall cost will probably be higher and you don’t have anything at the end of the Leasing Agreement.

  • At the end of the Leasing Agreement period, if everything is ok with the vehicle you simply hand it back with nothing more to pay. An inspection will take place to ensure there is no damage to the vehicle you have Leased.

  • Leasing companies generally ask you to pay a deposit which is usually equal to 3 monthly lease payments. This is a non-refundable deposit.

  • It is possible to take out a Maintenance Agreement for an extra monthly cost to spread the cost of things such as regular services etc. which ensures you don’t have any unexpected bills to pay.

  • You are often restricted to a certain number of miles per annum. Make sure you are realistic with this so as not to avoid any unexpected bills at the end of the Leasing Agreement.

  • It depends on the actual vehicle as to whether it is better to lease or purchase on finance. Some cars don’t depreciate as much as others, so make sure you look into this when deciding on the right vehicle for your needs.

In Summary

Leasing is a nice simple solution where you pay one monthly fee for the vehicle you choose. It can often mean that you could be driving a more expensive or prestigious car than you would be able to if you purchased a vehicle on finance.

Purchasing

Purchasing a car or other vehicle on finance is the most common way of buying in the UK. There are many finance companies out there offering car finance loans. Generally a car dealership will have agreements with a couple of different finance companies.

Points To Considering Before Purchasing A Vehicle On Finance

  • Depreciation – if you buy a brand new car then as soon as you drive it off the forecourt it loses value.

  • The interest rates you pay can vary from once finance company to another & the dealership will only have relationships with a couple of finance company’s so you might not get the best rate possible.

  • It could be more cost effective to take out a bank loan rather than use the finance company that the dealership uses.

  • Mileage is not restricted at all so there won’t be any hidden costs.

  • At the end of the Finance Agreement the vehicle belongs to you. It won’t be worth anywhere what you paid for it, but will still have some value if you wanted to sell this or part exchange it against a new vehicle.


So What’s The Best Option For Me?

So when it comes to choosing between Leasing Vs Purchasing what is the best option for me?  It is actually a lifestyle choice! If, every few years you want to be driving a new & more prestigious car than you could purchase on finance then Leasing would probably be the right option for you. If kudos isn’t important to you and you want to have something to show for your money at the end of the finance agreement & can afford the usually more expensive monthly costs then purchasing would probably be the better option.

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