Buying a new car is probably the second biggest purchase in your life, after a house that is. So it makes sense to try and make it as easy as possible, do you buy outright or do you lease?
There are positives and negatives to both, exactly the same as renting or buying.
The biggest difference with leasing is that you’ll get a new car every few years, you don’t have to worry about selling the car, you just give the keys back and walk out with a new car.
When buying a car you’re probably paying off a personal loan, so you’re effectively building equity – depending how quickly you’re planning to pay off the loan that is. Once that money is paid back the car is yours, you own it outright. You can sell it and get cold hard cash in return or buy another car of equal value negating the need for a loan.
So what’s the best route to take?
There’s no clear winner, it’s all down to what you want, or what you can afford.
Leasing will often mean lower monthly payments, sometimes this will be because of a hefty deposit, but that depends on the type of car and lease you’re after. You also won’t have to worry about vehicle maintenance, or tax, it’s all taken care of. Some brands also include insurance, so all you have to do is fill it with fuel and drive.
Mileage is always limited with leasing, you have to select how many miles you’ll be driving a year. If you go over this set mileage limit you’ll be charged on a per mile basis, which is basically a penalty – as the miles rack up, so will the cost. It pays to know roughly how many miles you’re going to be driving.
You’ll also need to treat the car as you would your own. If it comes back with dents, scratches and damage to the interior you’ll be charged. Wear and tear penalties vary, but the dealership will have to make good any of the damage before they sell it on, so it’s never cheap.
It also depends on how long you want to keep your car. Most people like to have a new car every three years or so, but if you’re the sentimental type and really want a certain car, keeping it for five years or longer won’t be a problem.
Also, if you’re an enthusiast and can buy right, your car may well become an asset once it’s paid off. There are cars out there that actually appreciate over their lifetime.
The main differences are that you actually OWN the vehicle if you buy. It’s yours and you can do whatever the hell you want with it. Drive 30,000 miles in one year, no problem. Ding it and don’t get it fixed, that’s up to you. There’s nobody else to answer to.
No big initial payment and no fines at the end of the payment terms.
Playing devil’s advocate, cars will need costly repair bills the older they get. You negate that problem by leasing as you only own them for three years at the most, everything will be covered under the manufacturer’s warranty in that time.
Ultimately, it’s a personal decision, neither is right or wrong, you just have to weigh up all the positives and negatives before signing on the dotted line.