Car leasing isn’t for everyone, the same way as car purchasing isn’t for everyone. That said, there are huge benefits to both but it all depends on what you want out of your car and what suits your situation the best.
So should you lease instead of buy? What are the pluses and minuses of car leasing over car purchasing?
In this article, we go over the good points and the bad points of leasing over car purchasing.
Pluses and Minuses of Car Leasing
Here are some of the advantages of car leasing over buying a car.
You don’t own the car
The reason this is an advantage is that someone else is taking the responsibility for the depreciation. Depreciation is when a car loses its value. All cars depreciate, it’s simply what happens when you drive the car. There are also other things that affect depreciation such as the market and any potential scandals that may have hit the manufacturer.
This means that when you come to resell your vehicle you will lose money on it. The amount you will lose varies, but it can still be painful when you paid so much money for it.
However, if you lease a car, then you don’t have that responsibility. When you have a lease car you hand the car back at the end of the contract without having to think about disposing of the vehicle. Your monthly payments that you make during your lease contract are fixed, so are not affected by the market, the economy or even whether the vehicle manufacturer is still in business, your monthly payments will stay the same and selling the car is not your responsibility.
What affects depreciation?
There are a few things that impact the depreciation of the car, these are;
- The service history
- The number of owners the car has had
- This ties in with mileage. The more efficient the better the mileage and in turn decreases the depreciation
- Condition of the car
You get a new car every few years
Car not everything you dreamed it would be? Found out there’s a new model coming out soon? Fear not, with a lease, you get to renew your car every few years.
At the end of your lease contract, you hand the car back, and simply get a new one. You can arrange it so your lease car goes back at the same time as your brand new car is delivered.
This is appealing to those who like to have the latest car with the latest technology and the latest safety equipment, but don’t want to have to go through the re-selling and the buying process all over again.
It is also very appealing to businesses. If you provide your employees with brand new vehicles every few years then this not only saves money on things such as repairs and fuel (as modern cars are more fuel efficient) but it also raises morale and keeps the best employees at your company. After all, who doesn’t want to drive around in a brand new car every few years? Also, it looks great for company image if your employees are driving around in the latest models.
You have all your servicing and maintenance costs built into one monthly payment
When you lease a car, you can have the option of a maintenance agreement. This covers all the servicing costs for the duration of your lease.
When you have a lease car, you have to get it serviced. This is in line with your terms and conditions and has to be at a franchised dealership. As you are aware, servicing costs money, and you might not necessarily want to part with that much money in one hit.
Which is where the maintenance agreement comes in. A maintenance agreement is an additional cost on top of your monthly leasing cost. This covers you for all your servicing for the duration of your contract. It essentially spreads it out over the duration of your contract rather than paying for the cost of servicing upfront.
So those are some of the advantages of leasing over purchasing.
However, there are some disadvantages.
You won’t own the car
Okay, so we said it was an advantage. And it is, for some, and there are some disadvantages to this.
We understand that there is a lot of satisfaction and peace of mind knowing that your car is bought and paid for. And, it’s also good to know that if your employment stops unexpectedly or illness strikes then you have a car that won’t be taken away or you have to hand back.
If you don’t own the car, then you also have to think about your mileage and keeping it in good condition. When you lease a car, because it is not yours, you have to stick to a certain mileage and keep the car in a good condition. If you own the car, however, then you don’t have to worry about this.
This isn’t to say you aren’t going to keep it in good condition, it just means that leasing might not be good for those doing high mileage or if they are going to be doing off-road driving or might get the car a little bit roughed up.
So not owning the car might not be for everyone. It’s something that you will seriously have to consider.
You can’t customise your car
When you lease your car, you don’t own it, so it is not yours to change. If you want to add a sound system or change the colour or modify it in anyway, you should think about buying your car instead of leasing it.
The general rule is that you can modify your car, but when you hand it back you will have to reverse those modifications. Otherwise you will face a fine. So really, there’s not much point in modifying your car if you are going to have to change it back in a few years anyway.
Therefore, if you are a bit of a car nut and want to improve your car and add all sorts of things to it then we would say that leasing isn’t right for you.
You can’t take your car with you should you move abroad
This is a fairly specific but it is something you will need to think about. While it might not seem it, a lot can happen in three years and one day you could be driving to work in Sussex and the next be asked to move abroad to work there instead.
And, if you do have to move abroad then you can’t bring your lease car with you. Getting out of lease contracts can be tricky, so you need to make sure that the next few years of your life are pretty solid before you get into one. If there is a chance you might have to move away then maybe hold off on getting a lease contract, or perhaps look at a Short Term Rental instead.
You have to think about the mileage
We touched upon this earlier in the article but it is something that you have to consider.
When you lease a car, you have a set mileage that is pre-agreed at the start of the contract. The higher the mileage, the more your monthly payments are likely to be. This is because mileage is one of the biggest factors when it comes to depreciation.
If you go over this mileage then you will be subject to an excess mileage charge. This ranges from 6p+VAT per mile to £1+VAT per mile, depending on the manufacturer.
If you are likely to be doing a high mileage, then it might be worth considering something different other than leasing. You could always consider a Finance Lease, it works similar to a normal lease but you don’t have a set mileage that you have to stick to.
So those are some of the downsides to leasing a car instead of purchasing a car.
In conclusion, there are some benefits and downsides to leasing a car instead of purchasing. On one hand, you get a new car every few years. New cars are more efficient, more reliable, more advanced and come with more safety technology. Leasing is also good for businesses who want to give their employees new cars every few years. However, if you do lease a car then you can’t take it should you move abroad and you don’t get the satisfaction of ever owning it. Whether you decide to lease is up to you, it is suited to different people and we would always recommend you thoroughly going over your options before you make a decision. We help people make this decision every day, so if you have any questions or any doubts about leasing then please do not hesitate to contact us.
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