Is leasing a car cheaper than buying?
By leasing a car, you don’t need to commit to huge upfront costs or pay for it in one sizeable transaction.
Because you will never own the car you lease, you only pay the value of depreciation for the length of your term. Most terms can run between 24 and 48 months and include an initial rental of anything between the equivalent of one to nine months rental.
The AA believe that a car will lose 60 per cent of its value within three years if you are driving an average of 10,000 miles per year. A quick look at the numbers shows why leasing is proving to be a popular option. If you were to buy a car for £20,000, based on the AA’s research, you stand to lose £12,000 by the time you sell it.
While it depends on the car you’re looking to buy, the figure you stand to lose in deprecation over time could be higher than the total sum of money you pay throughout a lease deal.
Unfortunately, leasing a car does not prevent it from depreciating. However it does take away from of that financial risk as you know exactly what you're paying. You also benefit by enjoying the freedom to regularly change your car every few years without the hassle of selling privately and all the pitfalls that come with that when you want to move on.
Cash famously used to be king, but having large sums of money tied up in assets - especially in the current climate - is not always desirable.
In April 2020, The Guardian reported that 9 out of 10 cars sold within a typical year in the UK are paid for using monthly payments on some form of finance plan, rather than buying outright.