Buying and leasing a car will bring different pros and cons for each individual. Some people will find that buying a car will give them the freedom and flexibility they need for their driving habits; others will find that car leasing relieves them of the responsibility that comes with owning a car while allowing them to try new cars every few years.
If you’re unsure whether buying or leasing a car is right for you, read this guide for everything you need to know.
What’s the difference between buying and leasing a car?
When you buy a car, you purchase that car to own. When you lease a car, you are essentially just renting that vehicle for a set period, typically 24 or 36 months.
Often, people will buy a car with car finance. There are different car finance options, but the most common will involve paying monthly repayments for a loan. At the end of the loan period, once all the agreed payments have been paid off, you will then own the car. Alternatively, you can buy the car outright by paying the full amount right away.
With leasing, you will agree to the period of time you will hire the car for and also agree the regular payments and overall cost. At the end of this period, you still won’t own the car and it will be returned to the lender.
What are the advantages of buying a car?
One of the advantages of buying a car is that the car will be yours to do as you please. This will only apply if you have bought the car outright or after you have paid off your car loan. However, once the car is paid for, you can sell it, modify it, drive large mileages etc., with no restrictions. You will have complete freedom to decide what you want to do with it as it will be your property.
Generally, it will be cheaper to buy a car outright and then drive it for a long time. Even if you get car finance, you will at some point pay it off and then you won’t have the monthly payments to fork out for each month.
What are the disadvantages of buying a car?
A downside of buying a car is that the car will lose value as soon as you start driving it. This will mean that even if you sell it, you’re unlikely to ever make the same amount of money back that you initially paid for it.
Another disadvantage is that cars can be more costly the older they are. So, if your plan is to buy a car and drive it for a long time, you could find that you face expensive costs when it comes to servicing and repairs.
Buying a car outright will often mean a large upfront cost, especially if you’re buying outright. Even buying through car finance can require a large deposit, followed by high monthly payments.
When you buy a car, you’ll be responsible for paying road tax. The cost will vary depending on the CO2 emissions, but can range from nothing to 0 emission vehicles, to around £30 for low emission cars, all the way up to and over £2,000 for high emission vehicles.
Another potential downside to buying a car is that it can be difficult to sell a vehicle. It will require time and effort. Even if you drive the car until it is no longer usable, you’ll then have the responsibility of arranging and paying for it to be scrapped.
What are the advantages of leasing a car?
Leasing a car will usually involve a much lower initial cost. You might still have to pay a deposit, but this will often be equal to the first month’s payment. You’ll also sometimes have the option to pay a larger deposit to reduce your monthly payments, if you have the funds to do so.
Another advantage of leasing is that you’ll have the choice to drive a new car every few years. Once your lease period ends with one car, you can move onto another, newer car and keep enjoying the benefits this brings. It also means you can usually avoid the expensive repair costs that come with older cars, as the car will be returned to the lender who will then be responsible for it.
When leasing a car, you may be able to access easy maintenance. If you lease a new car, they’ll usually come with a warranty that lasts for a few years. In this case, you’ll have peace of mind that the manufacturer will be able to cover the costs of most of the repairs that might arise while you have the car. Car tax is also typically included in the lease payments, so you won’t have to pay extra for this.
When you lease a car, you won’t have to worry about what you’ll do with it when you no longer want to drive it. Once your lease period is up, the car will simply be returned to the lender. You won’t have to arrange to sell it or pass it on to another person.
What are the disadvantages of leasing a car?
One of the disadvantages of leasing a car is that you will have restrictions, including on mileage. You will usually agree an annual mileage with the lender of the vehicle, and you won’t be able to go over this. If you do, you’ll have to pay an additional rate per mile, which can end up being costly.
You also won’t be able to modify the vehicle in any way when you lease the car. It will have to be returned to the lender in the same condition as when you first hired it, although some allowances will usually be made for wear and tear.
If the vehicle sustains any damage over the expected wear and tear, you will be responsible for fixing it. You can get it sorted during the lease period yourself, although it can be best to speak with the lender about it first, in case you need to take it to a specific mechanic, such as the manufacturer of the car. If you return it with damage, the lender will charge you for the repair costs.
Another potential downside to leasing is that it can be difficult to access the best deals if you have a bad credit score. Your credit report will be checked before you finalise a car lease agreement and if you have a bad score, you might not get approved, or you’ll find your monthly payments are higher to cover the risk.
What to consider when deciding to buy or lease
When deciding whether to buy or lease a car, you should first consider your financial situation. If lower monthly payments and a low initial cost is your priority, then leasing could be best for you. If you have the funds for higher outgoings, buying could be a better option.
You should also consider your driving habits and behaviour. If you consistently drive a low mileage every year, leasing might suit you fine. If you sometimes have to drive long distances, or your driving distances vary year-on-year, buying could be better.
Another factor to consider is what you want from your car. Do you want an asset that you can own, sell on, and modify? Or do you just need a vehicle to get you from A to B? Would you prefer to have a new car every few years, or are you happy to drive the same car as it ages?
You should also think about how much responsibility you want for your vehicle. If you like the idea of someone else dealing with the bulk of the maintenance and selling it on, leasing could be your best option. If you prefer to have the freedom to do with your car as you like, buying will be for you.
If you’re looking for a new car, GetCarFinanceHere can help. We have a number of car finance options and car leasing options, so you can find the right one for you and your situation. Our helpful team can assist you today and get you on the road ASAP. Apply for car finance or contact us for more information.