Should I buy or lease a new car?

20/12/2021

Should I buy or lease a new car?

If you're looking to answer the question, 'Should I buy lease a new car?', then it can be difficult to understand which of the many new cars is most suitable for you.

There's no doubt that leasing a car is a popular choice with UK drivers, and the British Vehicle Rental and Leasing Association says there are currently over 1.3 million contract hire vehicles on the roads.

But that doesn't mean that leasing is necessarily the right route for you, even though for many people it is an effective way to get behind the wheel of a brand-new car.

 

What is the difference between leasing and buying a new car?

While both routes will see you driving a new car, there are some fundamental differences that you need to understand.

When you buy a car, you own that vehicle outright and it's yours to do what you like with.

You could have the cash saved up, access a bank loan or sign up for a hire purchase deal. You could even consider a personal contract purchase (PCP), which sounds similar to leasing in that you pay a deposit and agreed monthly payments but there's a balloon payment when your contract ends.

You can either pay this balloon payment to take ownership of the car, or hand it back and begin a new agreement.

Whereas with personal contract hire, or leasing, you'll pay a deposit and a monthly payment for an agreed period of time.

This contract will run for between two and four years, and sometimes up to five years, but you never get to own the car.

And when the contract ends, you will need to hand it back and there's no option of you buying it.

 

The pros and cons of car leasing

So, if you never get to own the car, what are the pros of leasing that make it so attractive to so many people? Put simply:

  • You can get a new car when your contract ends
  • The monthly payments tend to be lower than when financing a car
  • You won't be facing a balloon payment or face large fees when the agreement ends.

 

Having looked at the pros of leasing a car, what are the cons?

  • You will never own the car - and there's no option to buy
  • You will have to abide by a strict mileage limit when leasing a car - or face extra mileage charges
  • You must hand the car back when the contract ends.

The pros and cons of buying a car

Having looked at the pros and cons of car leasing, what makes people still invest cash when buying a car?

The pros of buying a new car include:

  • You either own the car outright from the beginning, or with a PCP deal, for example, have the option to buy
  • When you own the car there are no mileage restrictions
  • There's an option of handing the car back if you have financed it.

 

The cons of buying a car include:

  • Finance deals for buying a car tend to be longer than lease deals
  • Buying a car tends to work out more expensive when looking at monthly costs
  • The car's depreciation will be borne by you if you own it.

 

Is it cheaper to buy or lease a new car?

While it is usually cheaper to lease a new car than buy one, there are some downsides.

The best way to understand this is to look at it in the same way as if you are renting a home, rather than buying it.

When renting a property, you will not pay anything towards its ownership, and you'll need to stick to the agreement terms.

However, there are no extra costs if you follow those terms.

When buying a car, it's like taking out a mortgage - you need a large deposit, and you'll pay more over the long-term.

You will own the car, or have the option of doing so, when the agreement ends.

And when owning a car, you are the one responsible for keeping it roadworthy and legal, which can be expensive once an MOT is required.

This also means that any serious damage caused to the car will come under the car leasing company’s fair wear and tear rules and must be paid for.

Is it better to buy or lease a new car?

The issue of whether it's better to buy or lease a new car comes down to your own circumstances you should consider:

  • If you want to drive a new car every few years
  • You would like lower monthly payments and not own the car outright
  • Have a car that you can use for business - and enjoy lower lease rates for businesses.

 

When it is best to consider buying a car:

  • You want to own the car outright
  • You do not want to be restricted by mileage limits
  • You prefer sticking with a car for a longer period.

 

Should I buy or lease a new car?

Should you have any questions or issues over whether you should buy or lease a new car, then you should speak with the Tilsun Leasing team as soon as possible on 03330 040 888.

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