There is no question that one of the most exciting processes any of us go through is deciding to buy a new car.
There are so many variables to consider, be it your occupation, whether you have children or most important of all, your budget.
Aside of all these things stand two clear methods of getting a new vehicle, buying it outright or opting to lease from a dealership.
If you haven’t had experiences of both yourself, you’ll no doubt have had friends and family explaining to you which is better, all becoming a big financial headache.
To help you find the option that best suits your situation, here are our pros and cons of buying and leasing your next car:
The process of buying a car is much broader than leasing because you can be in the market for a new car or a second hand car, both of which come with their own merits.
- – Full ownership of the vehicle: do what you please, its all yours.
- – Less to pay: aside from tax, insurance and any maintenance you might need, there are no other costs to accompany your car.
- – Mileage: Some leasing deals may have an annual ceiling on your mileage. Unless you are concerned about sell on value, you can clock up as many miles as you like.
- – More flexibility: When leasing you’ll find yourself on a deal spanning a number of years. The plus of buying is that you can buy/sell whenever you like.
- – Economical: Owning your own car is generally more economical because you are generally more likely to keep the same car for longer through ownership rather than leasing.
- – Modification: If you are a big petrol head and enjoy fine tuning your car then buying outright is the obvious option.
- – Initial costs: The upfront cash payment of buying a car is generally costlier than leasing, so you need to have put plenty aside.
- – Depreciation: Cars depreciate in value quickly, so if you plan to sell yours on and make any sort of meaningful cash, you probably won’t want to be putting many miles on or keeping hold of your car for long. This article from What Car can help you work out your car’s depreciation.
- – Monthly costs: Whereas leasing costs are often rolled into one reasonable fee, buying can prove to be pricey, especially if you are a new driver or have had a few bumps and scrapes along the way.
Leasing is very different to buying a car outright because generally you will be handing the car back after a couple of years, plus it will be a new model you get your hands upon.
- – Car quality: The beauty of leasing allows you to have a brand new car which you couldn’t otherwise afford if you bought outright.
- – Repair costs: Most leasing deals mean the majority of repairs your car needs may come under the vehicle’s original warranty, saving you any extra costs.
- – Initial payment: While you will be required to pay some money up front, it is a mere fraction of the cost of buying outright.
- – Trade in: Unlike the uncertainty of trading in a car you own, once your lease comes to an end, you can be certain you can hand it over and make a reasonable deal for a new lease car.
- – Business vehicle: Leasing is a great option if you own a business, particularly if it’s a relatively young business. An upmarket five-door can make a good first impression, or a van could offer practicality and reliability you’d struggle to buy upfront if you’re just starting out. See this article from The Car Expert by the guys at Alternative Route, which looks at this in much better detail.
- – Mileage: Generally, your mileage is limited, typically to around 15,000. Exceeding your annual mileage will bring an extra cost at the end of the lease or a raised price of your monthly rate.
- – Ownership: Unless arranged, you won’t own the car at the end of the lease; you have only being paying for its use. This means you need to set up another lease or work out a deal to buy the car at the end of the lease date.
- – Long term: While buying up front is more expensive in the short term; it is certainly cheaper in the long term. After owning a car for a number of years your insurance will hopefully have dropped and aside of repairs you’ll have nothing else to pay. If you lease, there will always be monthly fees to keep the car.
There are certainly plenty of positives and negatives to owning and leasing, however, we all exist with different set of circumstances, so one will definitely work more for you than the other.