Should I Buy or Lease a Car? Buying vs Leasing
2nd September 2022
The big ‘should I buy or lease a car?’ debate. It’s a decision that requires a lot of research, thought, and weighing up the pros and cons of your own personal circumstances.
For some drivers, leasing or buying is just a matter of pounds and pennies. For others, it can be more emotional and sentimental than that. But, before any hasty choices are made, we’ve taken the time to curate this article full of the key distinctions so that by the end, you’ll have a clearer vision of what you want to do.
What’s the difference?
You can’t begin driving around in your perfect car if you don’t fully understand the difference between leasing and buying.
In short, if you choose to purchase a vehicle, it means you pay for its entire value, and it doesn't matter how long you keep it or how many miles you put on it. When you lease a vehicle, you’re only paying for some of the total value because you’re essentially renting it from the dealership. However, once your lease period comes to an end, you’ll have the option of either returning the car or buying it at a predetermined cost. This is usually listed in the lease contract.
Now, let’s look at the pros and cons of each…
Pros of leasing
Lower monthly payments
If you’re apprehensive about the monthly costs of buying a car, leasing might be for you. It eases the burden of these payments because they’re typically considerably less than car loans. Leasing also allows people to afford vehicles that are more luxurious or expensive.
You can get a new car every few years
Some people enjoy switching up their cars every few years. If that’s you, leasing may be a good choice. This is because when you pay off your lease, you can return the vehicle and get your next one.
Maintenance is not as much of a worry
Lots of new cars offer warranties that last a few years. So, if you were to take out a three-year lease, the majority of the repairs the car may need should be covered. Lots of leasing arrangements also eliminate the anxiety and hazards of large unforeseen expenses.
You don’t have to worry about resale
Not the sort of person who likes to haggle? If that’s you, we imagine there’s nothing more you’d hate than having to sell your car to a private buyer or a dealership. With a lease, you simply return the vehicle once the period is up.
Cons of leasing
You never own the car
This is probably the biggest and most obvious disadvantage. Just like renting a house rather than buying it, you won’t technically own your leased vehicle. This means you don’t get anything back once the agreement is finished. Instead, you’ll always be paying out.
You’ll be charged for damage
Before you hand the keys back, you’ll need to make sure you’ve paid for any repairs that need to be done. While most of the mechanical elements are covered through the warranty, the company you leased the car from will expect it to be returned in a good condition. If it’s not, you’ll get charged. You’ll also get charged if you exceed the mileage limit stated in the original contract.
Ts & Cs
Many lease terms and conditions are pretty restrictive. On top of potential repair charges, you’ll have to fork out more if you want to return the car before your lease term has ended. This can often be quite a lot of money, so you’ll need to be sure you want the vehicle for the amount of time you agree upon.
Plus, the lender may also want to be sure you can afford the monthly repayments, which means you may be subjected to an invasive credit history check. And if your score isn’t high enough, you could be rejected.
Pros of buying
You’ll own the car
If you want the security of owning a vehicle, buying is probably the choice for you. Alongside this peace of mind, you’ll also be able to make any modifications you like, unlike leasing.
You can sell the car
If you’re ever in a position where you need money fast, owning a car means you’ll be able to sell it.
No annual mileage limits
A major advantage of owning a car is the fact that there are no pre-arranged mileage limits. You don’t have to worry about constant clock watching like you would if you were leasing, which can be great for those who drive a lot.
No damage fees
Like we said earlier, if you lease a car, you have to pay damage fees to the dealership as well as pay for the damages that aren’t covered by the warranty.
Cons of buying
Every pro has its cons, and here are some of the disadvantages of buying a car…
This may be the most obvious buying a car con. As soon as you drive out of the dealership, your vehicle decreases in value. It will never appreciate, and if you want to sell it, you won’t get the same amount you paid for it. Obviously, some vehicles depreciate quicker than others, so it’s worth researching the make and model of the car you’re planning on buying.
Buying is usually more expensive on a monthly basis
This is because the loan payments are higher because you're paying off the entire purchase. There are also other finance charges, fees, taxes, etc.
When asking yourself the question of ‘should I buy or lease a car?’ hopefully, things make a little more sense now. Your choice should all depend on your driving needs, lifestyle and financial situation. But if you need a little help financially and want to get the ball rolling sooner than later, check out our car loans.