Should you lease your next car?
Car leasing still holds great appeal, of course. Drivers can lease a car for 2-3 years before moving onto another one. There’s no long-term commitment and you don’t need to worry about depreciation.
Moreover, there are some great deals available.
Naturally, there’s another side to the argument, too. Leasing has its pros and cons, which OSV is going to take a look at in this article to give you a better idea as to how you should purchase your next vehicle. Let’s take a look!
Why you should lease your next car – Pros
There are lots of advantages to leasing a car such as:
If you can’t decide between leasing a brand new car and buying a used one, the most obvious advantage of leasing a new one is that you’ll spend less on maintenance. According to research, the average British driver will spend over £40,000 over the course of their lifetime on maintenance alone. That’s a lot!
All lease cars, on the other hand, come with a Manufacturer’s warranty that, in the majority of cases, covers 3 years.
Breakdown assistance and road tax is often included in the lease agreement too, which is one less thing you’ll need to worry about when the time comes.
Moreover, some lease agreements will offer maintenance packages that cover servicing and in some cases, tyre replacements.
Leasing means you can potentially get a better car for less cash
Many British drivers want a good car – but for less cash. We love a good deal, and leasing certainly represents just that.
Leasing has been traditionally good for premium cars in Britain because lease payments tend to work out better for the buyer in the long term than if you bought a car. This means you can drive a Mercedes or a BMW without being hit too hard in the pocket.
The upfront cost is low
Typically, the upfront cost of a lease car is between £1,000 and £2,000. It’s up to you if you wish to put more down and face lower monthly payments, of course. Whatever works best for you.
Leasing gives you the flexibility to find a comfortable balance between your initial outlay and monthly budget.
You don’t have to worry about the disposal of the vehicle
At the end of your lease agreement, the leasing company will collect the car from you so that you don’t have to worry about getting rid of it. That’s one great weight off your mind!
Depreciation isn’t an issue
There’s often one major snag to buying a brand new car: Deprecation. After 3 years of ownership, our car isn’t worth a fraction of what we once paid for it!
Some cars are worse than others for depreciation and some are really bad. If you lease your next car, however, you don’t need to worry about depreciation.
You get a new car every few years
Perhaps the best thing about leasing a car is that you get a new one every few years! This is made even better when you don’t need to worry about selling your old one on. All you need to do is return it to the leasing company and pick a new one.
Why you should lease your next car – Cons
It’s not your car
As car owners, we like to attach a certain sense of ownership to our car.
Perhaps we even like to give it a cute name, like “Marvin.”
But when you lease your next car, the car isn’t yours. It’s the leasing company’s, and eventually, they will want it back.
At the start of your lease agreement you will agree to a set amount of miles each year. This can vary depending on your situation. However, if you go over that annual mileage you will be subject to an excess mileage charge. This can vary depending on the vehicle, but typically the average is 6p/per mile
You can extend your mileage during your lease agreement, but sometimes it’s not actually the cheapest thing to do.
You can find out more about excess mileage here.
An accident can be costly
If you have an accident and your insurance pays out less than you actually need, you will have to make up the difference.
This niggle can be avoided if you take out GAP insurance, which is usually offered before you take delivery of your vehicle. It covers the remaining amount in the event of a shortfall and fills the gap between the insurance payout and the cost of a car.
Read more about GAP insurance here.
You are responsible for the remaining payments regardless of your situation
This can be a scary part of the leasing agreement for some drivers. If you lose your job or otherwise come into financial hardship, you can’t renege on your payments. They have to be met.
There is the option of returning the car early, but you’ll be landed with an early termination fee.
Hidden costs shouldn’t be an issue if you go through a trustworthy leasing company, such as OSV. Hidden costs can include:
- Admin fee
- Servicing costs
- Fully comprehensive insurance
- Excess mileage charges
Read more about hidden costs here.
Will you get a better deal if you lease your next car?
If you like the idea of owning a brand new car every few years, and don’t want the hassle of selling a used car that’s depreciated badly and seen better days, leasing is a great option. The monthly payments are fixed, which means you know where you stand, and maintenance can also be added at an additional charge.
But are you really getting a better deal?
More often than not, it all comes down to a car’s Residual Value. In other words, how well a car holds onto its value after three years of ownership. If a car is predicted to hold onto its value well, you might get a better deal if you bought it. On the other hand, if a car is expected to depreciate badly after 3 years, you’re far likelier to get a better deal if you lease your next car.
It’s also worth remembering that leasing companies have a lot of buying power. They get given massive discounts by the Manufacturer and you, the buyer, gets to reap the rewards of those savings.
For further reading on how to get the best deal on a new car, check our guide here.
So, should you lease your next car? If you want less hassle, a new car every 2 or 3 years and are pretty confident you won’t run into financial hardship, car leasing is definitely a great idea.