Leasing a Car vs. Buying a Car; Help & Advice
More and more people are looking to lease (by which we mean Contract Hire) a car rather than to buy their car. Car leasing is often a phrase banded around colleagues, friends and families without ever really being understood properly. It is therefore important for anyone considering the leasing v buying conundrum to review the below. Hopefully this should help you understand the question “should I buy or lease my next car?”
Why should I lease my next car?
- Low initial rental options available;
- Fixed period of car usership ranging from 2 years to 5 years;
- Option to include a maintenance package to cover servicing, maintenance and tyres i.e. “fully-maintained” car lease;
- An individual can benefit from ‘fleet’ discount levels;
- Flexible contract parameters relating to duration and mileage; and
- Above all, no depreciation concerns.
Why should I buy a car?
- You own the car – not the finance company;
- You can flexibly sell the car at any time during ownership; and
- The car can incur as much, or as little, mileage as you require. There is no need to remain within a contract.
Why should I not buy my car?
- Often necessitates a large upfront payment/deposit;
- You are subject to the uncertainties of depreciation;
- Inability to include a maintenance programme (and therefore undertake cost of maintaining the vehicle);
- You will be unable to secure a preferable level of discount on the car; and
- You have to undergo the hassle of selling the vehicle.
Why should I not lease my car?
- Contract is relatively inflexible – if you don’t like the vehicle and want to terminate the contract early then you will need to pay an early termination fee to end the contract;
- Costs/penalties will be applied at the end of the contract if you do not maintain your vehicle in accordance with the funder’s requirements. In addition, should you go beyond the contracted mileage, you will be charged an excess mileage charge; and
- You cannot own the vehicle.
Noticeably, leasing v buying a car is a difficult contention to answer easily. Making the decision will depend very much on the individual and their circumstances; if you are someone who wants to change their car every 2-3 years and fix what you pay for that vehicle, then car leasing should prove very useful for you. However, if you are someone who enjoys owning a car or being able to keep it (or sell it) at your discretion, it seems that buying maybe a more preferable method for you.
Over the last 5 years, there has been a sharp increase in the level of personal contract hire contracts being taken out by individuals. CarLease UK believe that much of this relates to the change in buyer attitudes towards vehicles, as the recent recession proved the importance of budgeting and fixing your costs. Hence car leasing has now been accepted as the only method to achieve this.