Owning a car is one of the most significant decisions you can make. Even for ‘budget’ models, the costs involved can dent your budget. Despite the costs involved, having access to a car improves the overall quality of life you enjoy. It is easier to commute to work, run errands, and meet social commitments when you don’t have to depend on public transportation.
There are two ways to have your own car; you can either buy it or lease it. Buying a car means purchasing it from its previous owner and taking ownership of the vehicle. This usually involves making a cash deposit and making monthly repayments. You can also apply for car finance.
Alternatively, you can lease a vehicle in which case you get to ‘rent’ it for a specified period of time. With a lease, you don’t own the car.
In what circumstances is leasing a better option than buying a car?
If you will be using the car for business purposes
In the UK, the US and the EU; the monthly leasing fee is tax deductible if the vehicle is being used primarily for business purposes. In most of these jurisdictions, the same does not apply for the monthly instalment payments that you make when you are purchasing a car.
Assuming that the monthly leasing charge is similar to the monthly car payments when purchasing, you will save money when you choose to lease.
If you change cars often
Some people form long-term bonds with their cars that can span decades while some of us prefer to drive the latest model. If you are easily distracted by newer models, then leasing is the right option for you. Buying and selling cars within short periods of time is not financially sustainable; simply lease a car for a while and get a new car when your lease expires.
If you require the vehicle on a temporary basis
Purchasing a vehicle is a long-term commitment. You need to ensure that the vehicle will meet your needs for years to come. If your needs are more temporary, then it makes more sense to lease a vehicle rather than purchasing it.
Most lease agreements cover periods ranging from one month to two years. If you require a vehicle for less than two years, it is much cheaper to lease it rather than buying it.
You should always lease with an established, well-reviewed company that offers coverage throughout the UK if you want to have a pleasant experience.
If you are working with a tight budget
When leasing a car, you are not taking ownership of the vehicle, just paying for the depreciation it experiences while under your usage.
This means that the monthly cost of leasing a car will be much lower than the cost of monthly instalment payments when purchasing. In some instances, the monthly purchase payment might even double the leasing charge.
If a car leasing service is offering attractive sales promotions
The car leasing industry has become very competitive, and different leasing agencies usually have offers in place to entice clients.
The most popular of these is the leasing give-away deal where older models are available for lease at highly discounted prices. Take advantage of these offers as they appear.