Is it better to buy or lease a car?
The decision of whether to buy or lease a car can be difficult, everybody’s choice will differ dependent on individual circumstances.
Leasing a car can be a great option for both business and personal use. With so many factors to take into consideration such as mileage, affordability and insurance, leasing can be a suitable solution for start-ups who don’t have the capacity to own their own fleet, or for a new hire on a trial period, prior to committing to an owned company car.
Other situations where leasing would be a good fit include:
- Temporary contracts
- Supplementing larger fleets
- Those who like choice and change
- One-off trips
- Seasonal demands
- Overseas drivers
What are the advantages of leasing?
Car leasing has a number of benefits and offers the flexibility to tailor agreements to suit your individual needs.
- Flexibility- Loan periods, mileage and other factors can be tailored to suit the individual and agreed in the lease. Most companies also allow changes to be made throughout the length of the contract, although it is it is worth noting that changes usually come at an additional cost.
- Avoid depreciation- Opting for a lease car instead of buying will avoid vehicle depreciation. At the end of the loan period, the vehicle is simply returned, and the process starts again with a brand-new vehicle.
- Option to change cars- Leasing also allows flexibility with vehicles. If circumstances change, or the individual fancies something different, leasing allows the option to switch car.
- Generally cheaper than buying- Monthly lease payments are generally cheaper than monthly car finance or loan repayments, and with low deposits, this means that you will have a little extra each month to spend elsewhere or save.
What are the disadvantages of leasing?
Leasing is not for everyone; some find the agreements restrictive (although many companies offer amendments or cancellations) and often prefer full ownership on a car.
- No ownership- The main disadvantage with leasing is that you will never own the vehicle. While this is not an issue for many, some people like to own a car and opt for finance payments as an alternative route - at the end of the payment period, the car is theirs to keep.
- Restricted mileage- When leasing a vehicle, a maximum number of miles is agreed. This can be restrictive if you find yourself travelling more and, if you go over the agreed mileage, an additional cost is incurred.
- Higher insurance costs- Generally, insurance isn’t factored into the lease agreement so is something you’ll need to arrange yourself, although some companies help to find the best quote. Car leasing tends to mean an insurance premium as leased cars must hold fully comprehensive cover.
- Long term leasing can be expensive - leasing a car long term can be an expensive commitment. By purchasing the same vehicle outright or taking a loan adds value to the vehicle long-term with complete ownership.
Leasing is not for everybody, and neither is buying. It is purely down to personal preference and circumstance. If you have any questions about car leasing or would like to chat to one of experts, get in touch today.