Buy Or Lease A Car: How to Decide on the Best Option

It’s a very common question these days and sometimes the decision is already made for you. Not everyone has the money available to buy a car outright.  This is especially the case when it comes to new models!  There’s more flexibility for drivers these days than you may think, however, especially when it comes to saving money. 

But when it comes to actively running a vehicle, is it better to lease or buy a car? It really depends on what you’re going to use it for, how often, and how flexible you are in terms of capital.  If you don’t have enough money to pay for a new vehicle upfront, then it could make sense to lease a car and spread the cost.

In this guide, I’ll be taking a look at the pros and cons of buying or leasing a new car.  I’ll explore what leasing a car actually means, and what your options are for buying outright.  That being said – what actually is better for your budget?  Let’s dig a little deeper and find out.

What Is Car Leasing?

Car leasing is actually fairly simple.  If you’re the sort of driver who needs a runaround, but isn’t too worried about owning a car outright – or simply can’t afford to – leasing a vehicle is going to be one of the most attractive options open to you.

Lease agreements will allow you to run or ‘borrow’ a car based on a monthly fee.  The amount of time you can rent a vehicle for will normally either be based on a set mileage, or a set amount of time.  You’ll also need to bear in mind that to get a good lease deal, otherwise known as a PCH, you’re going to need to depend on your credit score.

Car leasing can be a great way to drive away a brand new car without having to pay too much upfront.  In all likelihood, you should expect to pay around three or four months’ lease rate up front as security.  This, regardless of how good your credit score may be, is standard and should be expected.

Many people prefer leasing over buying because they simply don’t have the capital available to buy a new car outright.  Others may have reasons for not wanting to buy a used vehicle.  It’s entirely up to driver preference.

However, there are going to be a few restrictions in place which you’ll need to bear in mind.  We’ll look at these in a little more detail further down, but remember that you are essentially still having to give the car back at the end of your term!

Buying or Leasing a Car in the UK

All things considered, if cheap car lease deals are so good – why do people still buy vehicles outright?  Surely it costs more in the long run to operate?  Is it better to lease or buy a car if you’re struggling to find upfront funds?  Buy or lease a car UK or elsewhere – the difference can be as clear as mud.

The benefits of buying a car outright are obvious.  Once you’ve bought it, it’s yours for life, or for as long as you need it.  There are no restrictions in place, and providing you satisfy a deal, you can drive away with your new toy the exact same day.

The downside to buying a car outright is the fact that you largely need the money there to be able to make such a purchase.  You can get PCP finance, which could help to spread the cost of your new car – but you still won’t be able to own the vehicle outright.  It’s also likely that, along with and PCH leasing deals, you’ll need an asset to secure your car against.

All things considered, I seem to be pointing towards leasing as a better option for anyone looking for a cheap way to run a new car.  But things go a little deeper than that.  With the convenience of being able to pay a little each month, there are a few take-backs you may feel restricted by.

Is It Better to Lease or Buy a Used Car?

Let’s look at things from a slightly different angle.  So far, we’ve just been looking at new vehicles.  As well all know, paying for a brand new car, van or otherwise can be very expensive.  So what’s stopping you from buying a used model?  But what if it’s better to lease new rather than to buy used – regardless of the cost?  Here are the facts.

• Buying a used car means you’re buying a car’s history, too.  While used vehicles may be cheaper, they may come with a variety of different problems, as well as extensive mileage.  The benefit of buying new is, of course, the fact that it’s just rolled off the assembly line.  It’s got no past.
• However, running a used car may be an attractive option for drivers who simply don’t have the upfront cash.  While leasing a car can spread the cost, and while it won’t ever demand the full fee from you at the point of sale, you may end up paying more in the long run.
• But let’s flip back to the negative.  Used cars may need more care and attention due to previous owners’ mistakes.  Therefore, it could result in extra maintenance fees for you in the long run.  You need to be very careful about any used vehicles you look into.
• That being said, you get to own the car outright.  Providing it is legal to do so, you can do whatever you like with your car.  You won’t be getting checked up on for wear and tear, and its road life can end with you if you wish.

Should I Lease a New Car or Buy Used?

Some people simply prefer to buy new cars outright.  This isn’t just a matter of aesthetics.  It’s a matter of making sure you drive away a vehicle which is guaranteed to work properly, and not to suffer from years of use at the hands of another driver.  But then again – money talks!

Pros and Cons of Buying or Leasing a New Car

Now that we’ve taken used car buying into account, let’s turn back to new car purchasing, and dig a little deeper.  Imagine that you have the money available to buy a new car outright.  Would you still lease a vehicle, even if you didn’t have to?  There are some perks involved which keep people coming back for more – it’s mainly to do with flexibility – but it’s about time we ranked down the pros and cons of buying or leasing a new car.

Buying a New Car – Pros

• Buying a new car outright makes you its first driver and its first owner.  It’s a great feeling!  This means you get to drive away with a factory-perfect machine.  There’s no shady what-ifs, and no worries about mileage.  It’s there for you to run up.
• It’s yours to do with as you wish.  New paint jobs, entertainment upgrades, custom interiors – you’re free to do what you like with your new car, providing it’s within the boundaries of the law.
• Any dings, scrapes or wear and tear, you simply fix yourself.  You’ll also be covered by insurance which should protect you if damage isn’t your fault.
• You can sell your car whenever you like.  As a new model, and as its one careful owner (hopefully), it’ll likely sell well.
• Generally, you may expect to pay less over time than you would through monthly payments.  Buying a new car outright means that you only have running and repair costs to worry about.  That being said…

Buying a New Car – Cons

• Many leasing deals come with maintenance packages attached.  With running a new car, unless you have an insurance policy which can protect you if it’s not your fault, damage will have to be paid for out of your own pocket.
• Consider depreciation.  It’s said that new cars lose over 30% of its original market value in its first year on the road.  Therefore, unless you are going to be getting years and years of use out of the vehicle, you’re not going to get much of your money back when you sell it on.  That is, of course, unless you sell within six months or so.
• Owning a vehicle means having to keep it.  That is, of course, unless you sell or scrap it.  Selling a car which has depreciated in value can be tricky.  However, as the ‘one careful owner’, you might be able to find some decent interest.
• Car lenders, if you are approaching a PCP deal, tend to be a little stricter than PCH dealers.  This means if you have a poor credit rating, you may find more leniency in leasing. 

Leasing a New Car – Pros

• Consider what Paul Getty once said about appreciation and depreciation.  “If it appreciates, buy it.  If it depreciates, lease it.”  Leasing a car means you only ever pay fees based on your vehicle’s depreciation.  At the end of your lease term, you don’t lose anything.  Buyers will only be able to recoup a small fraction of their purchase cost as and when they come to sell.
• You’ll be able to get access to new cars on a regular basis.  That is, of course, if you are able to keep up to leasing terms over the contract periods you agree to.  This means having access to new technology and safety features, too.
• You won’t have to worry about paying for repairs or maintenance if your leaser covers you with a specific package or tariff.
• You won’t have to scrabble around for capital outright.  You can spread the cost of your car across several months without having to find big fees upfront.
• You get all the perks of the fact you’re still driving a brand new vehicle!  However, you won’t have to worry about some of the fees that pop up along the way.  It’s a fixed-rate deal which you agree to before you drive away.

Leasing a New Car – Cons

• You’ll never own a car outright.  This means you will need to be very careful with what you do with it!  Even slight wear and tear could invalidate your agreement or could add charges onto your final payment.
• In some cases, a final payment may be requested of you.  In other cases, you may not be able to end a lease agreement early.  Always make sure you check your rights to cancel and your flexibility therein.
• You’ll be limited in terms of distance, too.  Many lease deals have mileage caps, which means you will always be keeping a close eye on your dashboard.  It might not be very flexible for a lot of drivers.
• You won’t be able to sell your car.  It’ll still technically be the property of your leaser.
• While lease payments can seem affordable on paper, they can still add up.  You will need to consult a car lease calculator to be able to crunch your specific numbers.

Conclusion

So – is it better to lease or buy a car?  That all depends on what you’re going to use it for, how often, and how flexible you are in terms of capital.  If you don’t have enough money to pay for a new vehicle upfront, you may be tempted to spread the cost.

Having looked at the pros and cons of buying or leasing a new car, the answer to our original question is still up in the air.  Ultimately, it is a question of circumstance.  Many people prefer to buy used cars – or to avoid driving altogether!

However, if you like the idea of driving away a new vehicle, car leasing has its benefits.  So too, does buying outright – but the one commodity you’re always going to have to calculate for is, of course, the pennies.