Many of us need a car to make our daily lives a little easier, from the school run to the weekly shop, our chores wouldn’t be possible without the help of a car. There are a few ways that you can drive away in a car of your choice, whether you decide to buy outright and own your car, or you choose to lease a car, paying a monthly payment to drive your chosen model.
But which is best? This guide will break down leasing a car vs. buying a car, and which is the best option for you. If you have any questions about leasing, get in touch with our experts, who would be happy to help you through the process.
What is car leasing?
Leasing a car means you will pay a fixed monthly fee to your leasing company to drive a car of your choice. You will choose an agreement length, whether that’s 24 months or 36 months, depending on your preferences. You’ll pay a fixed monthly payment over this period to drive the car. You can choose to include maintenance packages in your deal, so services and repairs will also be covered, along with road tax.
At the end of your lease deal, simply hand the car back to your provider. You won’t have the option to own the car, but you will be able to choose a new lease deal on a different model.
Pros of car leasing
So, what are the pros of leasing a car? Let us explain:
Fixed, affordable monthly payments
Choose a new car every few years
Fewer repair costs with maintenance packages and warranty
Lower upfront costs
Access to the latest models
No depreciation worries
Cons of car leasing
So, what are the pros of leasing a car? Let us explain:
You won’t own your car at the end of the term
You’ll have to stick to mileage restrictions
You may incur fees for wear and tear
What is buying?
Buying a car outright requires you to pay the total cost of the car in one lump sum. You’ll pay your chosen dealership, and the car will be yours. Unlike leasing, you will be required to keep up repairs and servicing. Buying a car outright is a good option if you’d like the freedom to customise your car. And while buying a car outright means you won’t have to make monthly payments, you’ll need to think about depreciation.
Another way of buying a car is with a car loan. You can choose a provider to loan you the cash to pay for your car outright, then pay this back over an agreed-upon period. Once your loan is paid off in full, you will own the car.
Pros of buying a car
So, what are the pros of buying a car? Let us explain:
You’ll own the car
You won’t have any mileage restrictions
You can modify and customise the car in any way you like
Once your loan is paid off, you can make further long-term savings
Cons of buying a car
So, what are the pros of buying a car? Let us explain:
Higher monthly loan payments
Higher upfront costs (especially if you’re paying outright)
Depreciation
You’ll have to take care of long-term maintenance and repairs
Leasing vs buying a car: Which is best?
To determine whether leasing or buying a car is best for you, there are a few things to think about, including:
Ownership
If ownership is important to you, buying a car would be the best option. Leasing doesn’t give you the option to buy the car at the end of the agreement, you’re simply paying to drive the car.
Finances
If you don’t have the money to buy a car outright or you prefer lower monthly payments, leasing is a better option. It’s more affordable and can be tailored to suit you.
Depreciation
You’ll need to consider depreciation when buying a car, but with leasing, you can give the car back at the end of the agreement with no risk to your money.
Models
Love driving the latest models? Leasing gives you access to the latest cars at a more affordable price, which may not be possible when buying due to a high price tag.
Leasing vs. buying a car: Financial considerations
Whether you’re buying or leasing a car, it’s a big deal. You must consider the financial implications of both to ensure you are making the best decision for you.
Credit score
If you’re choosing to lease a new car, your credit score will play an important part. The higher your credit score, the more likely you are to be approved for your chosen lease. If your credit score is not the best, some agreements can be tailored to your circumstances.
Monthly payments
Leasing is typically easier to budget for with affordable monthly payments. Just make sure the car you choose will suit your monthly budget so you can make these payments in full and on time. Buying typically has higher monthly payments, but you will own the car at the end of the agreement.
Depreciation
Leasing prevents you from the impact of depreciation — the decline in the value of your car over time won’t affect you. Buying means you will lose money on your car.
There are pros and cons to both leasing and buying a car outright, but doing your research before making a decision is essential. If you want to own your car, buying a car outright or with a loan may be the best option. However, if you want to experience some of the best new models, including electric and hybrid cars, explore car leasing at Car Leasing Made Simple for 35 years of expertise and an expert leasing team that is happy to help!
Leasing a car vs buying FAQs
Want to know more about leasing a car vs buying? Find the answers to your questions in our FAQs below:
Is it cheaper to lease or buy a car in the long run?
While buying is cheaper in the long run, leasing is more affordable in terms of monthly payments and reduced upfront costs. If you buy a car, once it’s paid off, you will be free from monthly payments, but this can take many years. You will also have to pay for maintenance as the car ages, a cost which is covered when leasing.
What happens if I exceed my lease mileage limit?
If you exceed the mileage limit set by your leasing company, you will have to pay mileage charges. This can differ depending on your agreement.
Can I still lease with bad credit?
Yes! While it is best to work on your credit score if you have bad credit, leasing companies can tailor your lease deal to suit you, depending on your circumstances. This means even if you have struggled with your credit in the past, you don’t have to be without a car.
Who is leasing a good choice for?
Leasing is a great option for those looking to drive away in a new model of their choice at a more affordable price. New cars are expensive to buy outright, and even with a car loan. If you like to experience new technology and drive the best new models, leasing is a great option, allowing you to change your car every few years.