Should You Lease Or Buy?
Getting a new car is a significant financial investment. There are so many different options that it can be hard to know which is the right choice for you. A little like buying a house, there are two main options you can rent (lease) or purchase. So which is the best choice?
Leasing a car is essentially a long term rental agreement. You make monthly payments over an agreed period. When the time is up you hand back the vehicle. You will often have to pay a deposit at the start of the leasing term. When you hand back the car, you can end up paying some excess charges. This could be if the car is damaged or if you drove further than you agreed to.
- Monthly payments are low
- You can get behind the wheel of a much nicer car than you could afford to buy
- The vehicle will be under warranty for the whole time you have it
- Often road tax and breakdown cover are included
- You will never own the car
- Mileage is limited, and you pay if you go over
- You pay more to get non-standard options
If you want to buy a car, you will most likely need to arrange some type of financing deal. A personal loan is often the most straight forward option. So you will most likely by paying monthly repayments for your new car.
- You own the car, so can sell it if you need to
- No mileage limits
- Lower insurance prices
- Monthly finance payment will be higher
- Large downpayment needed
- The car depreciates as soon as you get it
The right choice depends on your situation and your preferences. If you want flexibility, then buying your own car makes sense, especially if you will keep your vehicle for a long time. If, however, you want to be able to change your car every few years, then leasing is the right choice. Another reason to go for leasing is if you would struggle to get together a large downpayment to buy your car.