Is it better to buy or lease a car?

By Anita Jaynes on 1 October, 2022

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If you are in the market for a new car, you might wonder whether it is better to buy or lease your next car. Leasing is an option that is becoming increasingly popular and can work well for many motorists, but it will depend on your needs and preferences so it is helpful to look at both options to determine what is best for you.

What is the Difference?

First, it is important to look at the difference between purchasing a car and leasing. When you purchase a car either by paying the cost upfront or with a finance deal, you will buy the vehicle and become the owner. By leasing the car, you pay a fixed monthly amount over a pre-agreed period and then return the car at the end of the agreement. This means that you never technically own the car when you lease it.

Pros & Cons of Leasing

The key benefits of leasing are that you often have a low up-front deposit payment for the vehicle, the payments are fixed and road tax is often included. You also are able to drive a brand new car every few years and you do not have to worry about depreciation, which means that you do not lose money with leasing. Car leasing is a cheaper option and suits those that like the idea of driving a new car every few years.

In terms of drawbacks, you will not be the owner of the car which means that it cannot be modified and there are mileage limits in place. Not owning the car might be frustrating for some, but this is not always an issue.

Pros & Cons of Buying

In terms of buying a car, many people will prefer to have a vehicle that they own and can use as they please with full control and no mileage limitations. You also have an asset that you own in case you encounter any financial difficulties, but this will be a depreciation asset.

Following on from this, one of the main drawbacks of purchasing a car is depreciation and cars can lose over 50% of their value after just 3 years. You also have higher upfront costs when you buy a car and road tax is a separate cost to cover. 

The information in this post should prove to be useful and help you to decide whether it is best to buy or lease. Ultimately, it will come down to your situation, needs and preferences as there are both benefits and drawbacks to both. In recent times, many people are opting to lease due to the fact that it can be cheaper and gives the opportunity to drive a new car every few years, but there are those that will prefer to own the car that they drive.