The days of saving and buying a car outright seem to be over, as more and more people turn to leasing a vehicle instead. Thanks to the depreciation in value of cars, many people believe that paying monthly could be a better alternative to the loss from buying and selling. But what are the real pros and cons of each option, and which is best for you?
Although leasing a car helps you to have access to one without having to save up to pay a big lump sum, you will still need to make a down payment which can be up to 40% of the overall price of the car, despite the fact you’ll never have ownership of it. Monthly payments are something you can avoid altogether if you buy a car outright, but some simply don’t have this option and you can choose a plan that is affordable for you. The depreciation in the overall value of cars overtime, means that you will make a loss by buying and selling too, so it’s not always the best option.
Standard of Vehicle
The option of leasing vehicles allows people to have cars they would never usually be able to get their hands on, for example you could get a rolls royce lease! It’s also really useful for people who need to upsize their car at short notice too, for example if they have a baby on the way. You can sell your current car and use the money for a down payment on a larger family vehicle, and the same can be said for utility vehicles like pickup trucks and vans.
Depending on the kind of vehicle it is, you might be able to buy a second-hand version for the same cost as the down payment to lease it, however one of the main benefits of leasing is that you get a new car. New cars give you peace of mind as you know they’re unlikely to falter during long journeys, or at times when you most need them to be reliable.
There are a number of terms involved in lease hire which you can avoid altogether by buying a car outright. There are hidden fees such as early termination fees which you have to pay if you can no longer afford to make your monthly payments. This can be difficult to do considering the two to three-year length of most leases, and how much your personal circumstances can change in that time. You also have to keep leased cars very clean, and you cannot exceed a certain mileage per year.
Buying and selling cars can be a complex and time-consuming process, with the potential of being duped. In comparison, leasing a car is very straightforward; you simply pick it up and drop it off, and the initial application process also involves a basic credit check. Regular vehicle maintenance of the vehicle is even carried out for you by the provider.
When deciding whether to buy or lease a car, you should take into consideration what you can really afford to pay each month, and whether or not you could buy something similar but second hand outright. The type of car you need will make a difference to your decision, as will your confidence when it comes to buying and selling vehicles, and your ability to stick to the terms and conditions of your lease agreement. For more car buying advice, take a look at this article on how a downgrade could be the new upgrade.