Is it better to lease or buy a car?

Finance options and lease deals have soared in popularity in recent years, with an estimated 5 million cars being leased in the UK right now. But is it better to lease a car than it is to buy one outright? We’ll be exploring the benefits of both in this guide. So, you can decide which is right for you and your circumstances. Keep in mind, if you’re looking for a lease or car hire in Bishop Auckland County Durham – Croxdale has got you covered.

First, what exactly does it mean to lease a car?

Leasing a car essentially meansyou’re renting it for a loner term. This involves paying a deposit and then a set fee every month until the end of the agreed period. At the end of the lease, you return the car to the finance company with no obligation to buy it, having never owned it.

You can simply move onto the next lease with a different car. This is the main way of leasing car, and it is called Personal Contract Hire (PCH). Typically lease agreements range between 2 and 4 years with the potential to lower your monthly fees by putting down a larger initial deposit at the start. When leasing a car, you will need to keep it in good condition and stick within a mileage limit per year that you’ve agreed to with the finance company.

How is leasing a car different from finance buying it?

There are two options for buying a car on finance in the UK; Hire Purchase (HP) and Personal Contract Purchase (PCP). HP is similar to a lease in the sense that you are renting the car and paying monthly payments for a fixed term. However, the payments you’re making are paying off the cost of the car and by the end of the deal you will own and keep the car. These agreements aren’t usually as popular as PCP due to less flexibility and higher monthly payments.

Under a PCP finance contract, you initially pay a deposit and then make monthly payments throughout the term (usually 2 to 4 years). These payments and the deposit are covering the car's depreciation. Consequently, when the contract ends, you have the choice to make a final lump sum payment, which would make the car your own. The balloon represents the car’s guaranteed minimum future value.

You don’t have to make the last payment; you can give the car back without purchasing it or owing money to the finance company. Alternatively, you can use any equity that has built up throughout the deal to put towards a new car. However, it’s important to note that you likely would need a select a car from the same brand and using the same finance company.

What sets leasing apart from these finance deals is that it is solely a rental. The company you lease through might give you the option to buy the car after your lease if you want to. But ultimately leases are work by you paying a price to rent the car off the company for a specific period of the time and then return the car to them at the end.

Some drivers might also be eligible for the motability scheme. Speak to our team at Croxdale to learn more about our options for motability cars, MG.

What are the benefits of leasing a car?

Modern cars are expensive and there’s no getting away from the fact that buying a car outright will set you back a significant amount of money. Many drivers don’t have access to £10,000+ in one lump sum to pay for a car. And as a result, feel like the car they want is completely out of their reach. Having the option to lease a car opens up a new world of possibility for drivers looking for their perfect car. See the benefits of leasing below:

• The monthly payments are often more affordable than financing.
• It gives drivers access to a wide range of modern cars to suit their needs.
• Most people are eligible to lease.
• You can drive a new car every few years when your previous lease finishes.
• Road tax, breakdown cover, and MOT are often included in the lease.
• Avoid the cost and problems of older cars which could leave you off the road until they are fixed.
• Impressive reliability as the car will be at its best.
• Fixed cost, so you can budget accordingly and know how much you’ll be paying out every month.
• No depreciation risk.
• No stress or pressure to buy the car at the end of the agreement.
• You don’t have to worry about trying to sell the car when you want to get a new one.
• It can be very beneficial to businesses, no matter their size or how many cars they need.
• In most cases, lease vehicles are already in stock and ready to be delivered upon the start of the agreement.

What are the benefits of buying a car?

Despite leasing being a great option for many drivers, buying a car outright is still beneficial too. The advantages of buying a car include:

• The car will be yours outright or there’ll be an option for it to be yours if buying on finance.
• If the car is yours, you won’t have to worry about a mileage restriction, you can drive it as much as you want throughout the year.
• If buying on finance, you have the option to give the car back early if you want to.
• There are no conditions (fewer if financing) when it comes to how you can use the car.

When is it right to lease a car?

If you’re wondering whether buying or leasing a car is right for you, the below options are when it will likely be preferable for you to lease.

• You're in want more vehicle choices - leasing offers a broad selection of cars, including the latest and highest specification models that might have been beyond your budget if you were considering a purchase.
• You don't want the inconvenience of car upkeep - a comprehensive warranty and road tax are incorporated in your lease, eliminating much of the paperwork associated with purchasing a vehicle.
• You want to avoid the headache of selling – at the end of your lease agreement you can give the car back without worrying about selling it, and the costs and time involved in that process.
• You want to drive a new car – you can access a market of brand new cars in different makes and models. So, you can get the exact car you want no matter its normal purchase price.

Conclusion

Both buying and leasing can be a good option for drivers. Depending on their individual circumstances and preferences. At Croxdale, our car rentals are flexible to suit your needs, whether you’re looking for a daily hire or flexi contract, we’re here to fulfil your requirements. If you want to learn more about our leases and financing, contact the team. And see our latest MG4 finance deals today.

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