Is buying a car better than leasing?
Is buying a car better than leasing?
Buying a car is one of the biggest financial outplays you’ll make in your lifetime. They’re a significant investment, especially if you want to ensure it has come from a reputable dealer who has performed history and safety checks.
But, importantly, when it comes to buying, most importantly which is the best option for your financial circumstances and budget? We’ll look at the pros and cons of both buying outright and leasing a car so you can evaluate which is the best option for you.
Pros of leasing a car
Leasing a car is an alternative form of financing a car and can be a better option if you’re interested in driving luxury cars that would normally be out of your price range. It’s a good option if you like to get behind the wheel of a new car every three or so years and you’ll reap the benefits of less maintenance as you have an up to date car with the latest technology and features, that’ll also most likely be covered by the manufacturer's warranty.
When it comes to the end of the agreement, you don’t have to worry about what to do with the car either, as you just give it back to the dealer.
Cons of leasing a car
Leasing isn’t always the right option for everybody, and if you’re not happy with the prospect of never being able to truly own the car, it may not be right for you. Also, because you’ll never own the car outright, you legally aren’t allowed to sell or part exchange it to reduce the cost of your next vehicle.
By the end of your agreement, you probably will have ended up paying more than you would if you bought the vehicle outright, due to interest rates and because you’re paying for it during the time it most rapidly depreciates.
If you get into an accident with your leased vehicle, you have to let the finance lender know straight away, and they may have stipulations about where you can actually have the car repaired. You can read more about what to do in the event you get into an accident with your leased car here.
Leasing agreements also have strict mileage and maintenance conditions. If you go over the specified number of miles or your vehicle has excessive wear and tear when you hand it back, this can accumulate extra costs.
If you decide the car isn’t for you or you want to end your agreement early for whatever reason, you’ll likely accrue early termination fees and penalties, however this does depend on the individual finance lender.
Pros of buying a car
Buying a car outright means you’ll instantly be the sole owner and you won’t be indebted to any finance lender and you can avoid paying interest and for depreciation. If you’d like to have and drive your car for a longer period of time than three years, and take care of your vehicle yourself, then buying could be a good option for you.
You can also sell your vehicle or part exchange it whenever you’d like, without having to pay off any owed finance, meaning you can recover some of the vehicle value.
Cons of buying a car
Of course the most obvious is you have to have the full amount upfront, and you can’t spread the cost into manageable monthly payments. Because of this, you may not be able to afford a higher end or higher spec car.
Because you’re likely to buy a model of car that’s older than three years if you’re buying outright, you don’t get to drive it during its least problematic years and it won’t be covered by the manufacturer's warranty. This means you’ll have to supplement all the maintenance costs or carry them out yourself which can add up.
So, is it better to buy or lease a car?
If you want cheap monthly payments and to drive a new vehicle every few years with no fuss, leasing may be worth the extra expense. However, make certain that you can live with all of the restrictions on mileage, wear and tear, and so on.
If the constraints of a lease put you off, consider purchasing a less expensive new car or a well-maintained used car, such as a certified pre-owned vehicle from a franchised dealer like us, or choosing an alternative car finance plan.
However, for immediate and long-term savings, we recommend purchasing secondhand and paying with cash.