Car Leasing VS Car Buying

Last Updated: 21st Oct 2016
Car Leasing VS Car Buying

12th April 2016

One of the biggest dilemmas when wanting to get a new car is whether to lease or buy. Contract hire is the most popular process within leasing which features a wide range of the cheapest car leasing deals. Usually people aren’t aware of the positives which come with leasing as they tend to go off what they’ve been told – it’s not as daunting as you think. Just like everything though, each process has a fair amount of pros and cons… but which do you think is the best way to go?

Leasing

Pros
 - Predictable monthly costs which keeps things more organized and simple.

- Low deposit and low monthly payments which makes things more affordable from month to month.

- The monthly payments are lower than loan payments in most cases. This is on a like for like car lease deal versus an outright car purchase deal on finance.

- Leasing is very flexible as it offers you a range of different options such as bad credit deals, zero deposit deals, PCP and more.

- You get to drive a newer car for less. With leasing you can get into a better specification of vehicle for lower monthly payments in most cases.

- Hassle when trading in the car is non-existent.

- You get the choice to swap, return or buy the car.

- Depreciation isn’t a worry if you choose to hand the vehicle back. Contract hire is the easiest agreement for customers who like to own a newer car every few years. PCP is a guaranteed value at the end of your agreement so depreciation still isn’t an issue.

Cons
- You don’t own the car in the end and even if you want to you’ll be required to pay the balloon payment at the end (PCP agreement).

- You have to pay extra fees if damage is visible on the vehicle for contract hire agreements. On a PCP it may just affect your cars guaranteed value when you come to trade it in if the damage is substantial.

- A fixed amount of mileage is featured in which you are recommended not to exceed. If you do exceed your mileage you will be required to make a small payment per mile.

- Leasing does make insurance slightly higher with some companies. When taking a lease out on a PCP agreement it doesn’t however make much difference.

– there are a range of different paths you can take within leasing with various outcomes. This is why you need guidance from an account manager from the beginning.

Buying

Pros

- Insurance cost will decrease over time so it’ll be cheaper in the long run.

- The mileage isn’t capped so you’re not limited and won’t have to pay any extra cash if you excel a certain amount of miles.

- Cheaper in the long run as you pay for the car and that’s that. Providing you plan on keeping the car longer than your initial finance term or comparatively what it would cost to lease the car over the same period.

- No monthly repayments if you can afford to pay for your new or used car in one lump sum.

- There’s hardly any paperwork included which can make the process less confusing.

- Buying a car can be simpler in terms of maintenance. Some lease deals include maintenance, others don’t.
Also, if you own the car and you damage it there is no concern about fines when the car returns.

- You’re the actual owner of the car, so wear and tear doesn’t matter. Wear and tear however is mainly a concern for contract hire rather than personal contract purchase. You can find the difference between contract hire and PCP here.

- You can do whatever you want to the car, you can modify/customize away.This is also possible on a lease car on personal contract purchase.

Cons
- If you want to own outright from the off you have to pay the full cost upfront which can be very difficult.

- The car will depreciate over time, so if you want to sell your car, you are unlikely to make a profit or get your money back until around 4-5 years into owning the car.

- Selling the car can be a long and stressful process. People arriving at your door, test driving and bartering on the cost can be a serious hassle for private car sellers.

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