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Choosing between buying or leasing your next vehicle can seem like a minefield. Buying gives you the freedom of unlimited mileage and the security of a financial asset. However, leasing comes with a whole lot of added value and could allow you to drive away a far better car than you could afford outright.
There will be different positives and negatives for each vehicle financing method available to you. Here we propose five of the benefits of choosing vehicle leasing, along with the factors that may influence whether it is a suitable option for you.
1) Lower up-front costs
The biggest benefit of leasing a car, van or commercial vehicle, as with any item of hire, is the reduced initial outlay. You won’t need to have the funds to cover the entire cost of your chosen vehicle. Instead, you will be covering the depreciation of the vehicle over the agreed period based on the agreed mileage. You are not expected to cover the full cost of buying the vehicle or pay interest on this total value, meaning leasing is often the most cost effective vehicle financing solution.
The total cost of your lease will comprise of an initial payment plus a set amount of monthly payments. The total amount you will pay remains roughly same but is divided into profiles that reflect the amount of monthly payments paid upfront and then for the subsequent months.
This payment structure allows you to divide up your payments in a way that suits you: putting more down upfront reducing what you pay monthly and vice versa. Some funders do reduce the total cost of the lease when you put more investment in upfront as you are borrowing less money. However, the total amount you will pay will be roughly the same regardless of how you divide it up.
Leasing therefore makes a far wider, and often traditionally more expensive, range of vehicles obtainable to more of us with more flexibility around how and when we pay for it.
If you do have the funds to cover the cost of buying a car outright it can be more cost effective to buy rather than lease. This is particularly so if you are unable to agree an accurate mileage limit or if your vehicle is at risk of excessive wear or damage.
2) No concern over a depreciating asset
Car depreciation is an annoying but inevitable reality for all car owners. It is a given that only very few vehicles, classics and rarely used sports cars at that, will ever be worth more than when we buy them.
However, concerns around depreciation when leasing are removed. This is because you are only paying for the depreciation of the vehicle rather than its whole value and this figure is set at the outset of your agreement. Furthermore, unlike with a car you own outright, there is also no hassle at the end of your lease. The car is collected from you and that is that: simple and convenient with no fees, stress or haggling when reselling.
3) You’ll drive a new car every few years
Because of the payment benefits discussed above, leasing means many of us can afford to drive a brand new car when we wouldn’t be able to otherwise. We will have the car for the set number of years defined by our lease profile, swapping into another car at the end of term.
A new car is favourable first and foremost for reliability. Not only is it far less likely for something to go wrong with a new vehicle but you will also benefit from an agreed warranty package if the worst does happen. This will be no shorter than three years, but can be longer depending on your car of choice. As there are no previous owners, there is also no concern over unknown usage or service history which again bodes well for reliability.
New cars will also boast the very latest advancements in technology. This means vast improvements in safety, usability and fuel efficiency. The latter in particular will not only benefit your expenditure but also your carbon footprint.
Choosing to lease a new car also gives you the option to choose the vehicle’s exact specification. The Carparison team can factory order a car to suit your exact requirements; from colour, extras and styling. This will just require consideration of the lead time to account for a completely new build which will be considerably greater than a vehicle that is already in stock.
Vehicle leasing may not be right for you if driving a new vehicle and changing it for a newer model every few years doesn't appeal to you. Instead, consider a used vehicle or alternative financing methods that provide the option for purchase.
4) Added value
Delivery, collection, road tax (at the prevailing rate) and breakdown cover are all included in your lease. If you are looking for a way to drive your perfect car for a transparent and fixed monthly fee, leasing will be right up your street.
You can also add a maintenance package that can include servicing, general maintenance and disposable items like tyres and brake pads. This will be available for an additional monthly fee - this will be included on any quote documentation for your preferred lease deal when requested. All you will have to do is add insurance and fuel! Please note: maintenance packages are available with alternative financing methods.
5) Continued support
From the moment we receive your inquiry to the moment your car is handed back, you will have a dedicated Leasing Consultant at hand who will look after your every need. The gold trusted service you will receive doesn’t stop when you submit and order, or even when you have taken delivery of your new car. The Carparison team will be here to assist you when you need us, whenever that may be throughout your lease term (and hopefully onto the next one)!
The downsides to leasing a car
While leasing is a great option for many of us, it may not suit everyone. Before you choose to lease we advise considering these potential downsides:
1) You will never own the car. Beyond just the security of owning a financial asset, you are also therefore limited with the customisations you can make.
2) There are mileage restrictions. As the cost of a lease is based on the vehicle's depreciation in light of a set mileage, if you exceed this figure you will incur charges when you hand the car back. This is charged in pence per mile and this fee should always be visible on your lease quotation.
3) Wear and tear inspections will apply. Every lease car is subject to the BVRLA's fair wear and tear guide which acknowledges that a returned lease car will have damage reflective of standard, but careful, use. Any damage that exceeds these standards will be chargeable on return of the vehicle. A copy of the fair wear and tear guide can be requested from your account manager at any time.
4) Leasing can be difficult if you have a poor credit rating. In order to be accepted for a finance on a lease vehicle we will need to submit a finance application on your behalf. It does depend on the value of the lease you have chosen, but you are unlikely to be accepted for finance if your rating is not good or above.
The final word
When undertaking any financial commitment, it is important to consider all of your options. Ensure you are fully informed of all terms and conditions and any mediating factors inseparable from each arrangement. And be realistic about any circumstances that may affect your future affordability of the product you are choosing.