Is car leasing worth it? Use these 7 decision-making factors

Date Posted 27th July 2022
Read Time 7 min read

The prospect of driving away in a new car is always exciting, and it’s easy to get carried away with the idea. 

But before you decide on car leasing, you consider these seven questions to find out if it’s really right for you.

1. Do you want to own the car? 

With a lease deal, the car always remains the property of the finance company. It’s a little like a long-term rental and, when the contract comes to an end, you have to hand it back and walk away. 

For some, car ownership is the long-term goal and they’re in it for the long haul. If you fall into this category, you’re probably better either buying a car outright or using a finance deal such as hire purchase.

Others prefer the flexibility of having a new car every few years or being able to upgrade to the latest technology. In that case, a lease could be right for you.

2. Are you willing to look after your car? 

Most of us like to take good care of our cars, but when you own a car, you only have yourself to answer to. 

When you lease a car, the finance company will own the vehicle – not you. That means you have more of an obligation to look after the car. 

When you hand it back, wear and tear aside, it should be in the same condition as when you first received it. Anything above and beyond this, you’ll be expected to either put it right or pay extra charges at the end of your lease.

3. Can you afford the maintenance? 

MOTs, servicing, and unexpected repair bills – they can all add up. Not only can an unexpected repair be costly, but you also have to put in the time to organise getting your car fixed.

With a lease, a lot of these costs and worries are removed. As the majority of lease deals are on new cars, they typically fall under warranty for part, if not for the whole length of your contract. And as they’re newer cars, they generally have fewer repair needs anyway.

Another option with leasing is to choose a maintenance package. This is an add-on that can be added to your contract.

Not only does it ensure that your car is covered for servicing, routine repairs and even breakdown cover, it’s part of your monthly payment, meaning you don’t have to budget separately for the unexpected.

Most lease agreements run for around two to three years. So while your car is obliged to have its first MOT after three years, this means – unless your lease contract is longer than that – you won’t have the expense of MOT costs either. 

4. How do you want to obtain your car and finance?

Leasing and other forms of car finance work a little differently from each other. Car finance such as PCP or HP is an arrangement through a financial institution, like a bank or car financing company.

They’ll give you a loan to help you pay for the car. You might need to pay a certain percentage of the car’s value as a deposit, and the remainder the finance company will pay for on the agreement that you’ll pay them back on a monthly basis, plus interest.

A lease, on the other hand, is more like a contractual agreement. The leasing company owns the car and you pay them for the right to use it for a set amount of time. 

It’s much like renting a car, but over a longer period of time. 

And because you never own the vehicle and only cover its depreciation during your time with it, it’s often cheaper than other types of finance, too. 

5. How much time do you have? 

Over the long term, it’s usually cheaper to buy a car rather than lease it. The monthly payments may be lower with a lease, but this is because you’re only paying for only the depreciation costs and not its full value. 

So, if you’re looking to save money in the long run, and you have time, saving up to buy a car may be a better option for you.

On the other hand, when you buy a car – either outright or through finance – you’re essentially buying a depreciating asset and can lose money in that respect. 

Of course, this isn’t a cost you usually have to worry about until it’s time to sell, at which point you’ll likely notice the drop in value.

With a lease deal, though, you bear the cost of depreciation for the term, but that’s it. You never own the car, so you never have to worry about selling it. 

6. How long will the car last? 

As car finance agreements, such as hire purchase, tend to come with longer contracts than a lease, it’ll take longer to pay back. 

For instance, you may decide that it suits your budget to buy a car over a fixed five-year repayment term and have lower monthly payments. 

That’s fine – depending on the car you decide upon. If you pick a model that won’t last as long as the loan or something that’s not going to be suitable after a few years, you have to consider whether it’s worth it.

Again, depreciation comes into play here too. A car starts to depreciate from the moment you start to drive it, so the longer you have it, the more value it’ll lose. 

7. Have you considered the risks? 

There are advantages and disadvantages to buying a car outright, purchasing it on finance or leasing it, so it’s important to weigh them all up before you make your decision.

If you buy a car outright, you have the hassle of having to sell it when you want a new one, plus you have to bear the cost of depreciation.

With any form of car finance, if your financial circumstances change and you can no longer keep up with payments, you could be at risk of having the car repossessed, as well as this leaving a negative mark on your credit history.

Leasing comes with other risks too. Exceeding the mileage on your contract being one of them. 

Leases generally have mileage restrictions that you’ll agree to at the beginning of your contract. If you exceed your agreed mileage, you’ll face charges at the end of your agreement. 

Equally, if you fail to adequately maintain the vehicle, you could also face additional costs when your contract ends. 

Is it worth leasing a car?

Leasing has increasingly grown in popularity over the years and for good reason. 

It’s a great way to get your hands on the car you want with low monthly payments. It’s also flexible, meaning if you like the idea of having a new car every few years, you can.

Of course, if you want a car for a longer period of time and have no desire to change it any time soon, purchasing it either outright or through hire purchase or PCP could be a good solution.

There’s no easy answer to whether leasing is worth it, as it all rests on your personal and financial circumstances. 

If you’re looking for more advice, though, we can help. Our experienced team will be happy to answer any questions and use their expert knowledge to help you make the right decision for you. 

Get approved in minutes without affecting your credit score

Alternatively, if you already know what type of car finance you want to use, or you just want to find out if it’s an option available to you, you can use our quick and easy online application form. 

Just fill out a few details and we’ll let you know within minutes whether you’ve been approved – all without affecting your credit score. 

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