Is car leasing a good idea?
[vc_single_image image=”44463″ img_size=”article-image”]Car leasing, everyone has an opinion on it. For some, it’s the best thing since sliced bread. For others, it’s the worst idea ever.
We believe that you should be as knowledgeable as possible about car leasing before you make a decision.
So, is it a good idea?
In this article we look at the advantages of car leasing, and why it could be the best thing to happen to your motoring needs.
What are the advantages to leasing a car?
Firstly, let’s look at the general advantages to leasing a car;
- You get a new car every few years
- Probably the main advantage to leasing is that you get to get a brand new car every couple of years.
- You don’t have to worry about depreciation
- Depreciation starts the minute you drive a new car
- The chances are that if you buy the car and sell it on, you will end up making a significant loss.
- If you lease, you don’t have to worry about this because, at the end of the contract, you hand the car back.
- You can get a better car for less money
- Around 75% of luxury cars on British roads are leased
- This is because generally, luxury cars are cheaper to lease than they are to buy.
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- The upfront cost is low
- Usually, people put down around £1000-£2000 down initially with a lease contract. This is typically less than if you were to buy.
- There’s less maintenance
- All lease cars come with a manufacturer’s warranty. This usually lasts for three years, which coincidentally is the same amount of time the average lease contract lasts for.
When is car leasing a good idea?
So, there are the general advantages to leasing. But when exactly is car leasing beneficial to you?[vc_single_image image=”44459″ img_size=”article-image”]
- If you are unsure of where you are going to be in the future
- By this, we don’t mean six months, or a year but further into the future. For example, if you are planning on moving or travelling in a few years’ time then you may want to consider a lease car.
- This is because it may be more viable to pay for a car for two-three years and then hand it back than buy a car and either selling it on or have it sitting on your drive gathering dust.
- You don’t want the hassle of reselling
- Reselling your car can be a pain. You have to spend your Saturdays waiting around for people to walk around your car and kick your tyres (it’s always the tyres) and it’s just hassle
- When you lease, you hand the car back it’s done, you don’t have to worry about anything.
- If you like the thought of getting a new car every few years
- Pretty self-explanatory but if you like the idea of getting a shiny new latest model every three years or so, then leasing is a much better option.
- If you are a business
- There are a lot of business benefits to leasing
- But we’ll go into that in a little bit
So, those are some reasons why leasing might be a better idea than buying.
Why is business leasing a good idea?
Leasing is particularly popular with businesses. This is because there is a range of benefits to business leasing. Some of these include;
- Tax benefits
- If you are leasing through a VAT registered company then you can claim back 50% of the VAT on a car and 100% on a van.
- The exception is if you use the vehicle for personal use. But, if you do, you can still benefit from leasing.
- You can claim the monthly cost of the lease against profits
- This is if you cannot claim the VAT back. The percentage of this varies depending on your car’s emissions.
- If your car emits more than 160g/km then you can claim only 85% back. Anything lower and you can claim 100%.
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- The finance commitments can be “off balance sheet”
- This applies to Contract Hire. This means the liability of the finance doesn’t appear on company accounts.
- Your cash isn’t tied up in a depreciating asset.
- There will be times when manufacturers and suppliers will offer better discounts to businesses than they will to private individuals. However, this isn’t always the case.
You can read more about business benefits to leasing here.
Is car leasing right for me?
After all, that, is car leasing right for you? After all, it’s not going to be a good idea for everyone. Car leasing would be right for you if;
- You are leasing through a business
- You don’t want to worry about depreciation
- You like the idea of having a new car every few years
- You don’t want to own the car at the end
If you want to know when car leasing isn’t right for you, then you can read our article here.