Choosing the right car for you can be a challenge, especially when it comes to deciding whether to buy or lease it. While owning your car might be your top priority, having the latest model in your driveway could be more important to you. Consider your budget and your non-negotiable preferences to help you make your decision.
In this guide, we’ll highlight the main differences between buying and leasing so you can drive away feeling you’ve made the best decision.
Buying vs leasing a car
When you buy a car, you pay the full amount upfront, either via a dealership or a private seller. It’ll belong to you from the moment you drive away.
Leasing a car, on the other hand, means you’ll essentially rent the car by paying monthly payments in exchange for use of the vehicle. At the end of your lease, you’ll return the car to the dealer. It’s then up to you whether to start a new leasing contract or buy a new car instead.
The difference between buying and leasing a car
The most significant difference is that you won’t have the opportunity to own your car if you lease. You’ll only be able to become the legal owner of your new motor if you buy it. This gives you the flexibility to keep your car for as long as you like, or to swap it when you’re ready.
Leasing a car gives you an opportunity to drive away with a car you might not necessarily be able to afford otherwise, as you’re essentially hiring the car for a set length of time. You won’t own the car though, which means you’ll have to give it back when your contract ends, but you won’t have the additional responsibility and expense than often comes with car ownership either.
The benefits of buying a car
The obvious benefit of buying a car is you’ll have complete control over your vehicle from the outset. Customise it however you want to and drive to your heart’s content without worrying about mileage or usage restrictions. You can also keep your car for however long you like, which is ideal for drivers who prefer to keep their costs down instead of driving the latest model.
It’s worth mentioning that you don’t have to find the full amount upfront to enjoy legal ownership of your vehicle. If you don’t want to wait to save up, or you’re keen to keep your nest egg intact, you could use a personal loan to buy your new car. Either take out a loan for the full amount or apply for a smaller amount to top up your existing funds. Though you will need to pay interest on a loan, it could help to make a large payment more manageable by allowing you to spread the cost.
While car finance is a popular option offered by most dealerships, you won’t legally own the vehicle from the get-go. You might have an option to purchase the car at the end of your term, though you might need to pay a final fee or balloon payment depending on the type of finance chosen. Find out more about the difference between car finance and personal loans here.
The benefits of leasing a car
Leasing enables you to access newer or higher-end cars that might otherwise be unaffordable, as you’ll be paying monthly for use of the vehicle rather than owning it yourself. You also won’t need to worry too much about maintenance or repair costs, as these costs are usually covered by the manufacturer.
Leasing is ideal for drivers who prefer to drive a brand-new car every few years without the hassle of selling the car themselves. It’s a great way to try out the latest models and make sure you’re always making the most of new technology without needing to find the money to buy the car outright.
So is it better to buy or lease a car?
It really does come down to your personal preference, but there are a few factors that could help you make a decision:
Buying a car might be best for you if…
Leasing a car might be best for you if…
You want to own your vehicle outright
You like to drive a new car every few years
You want to drive without mileage or usage restrictions
You want to save money on maintenance and repair costs
Modifying and customising your car is important to you
You want to spend a smaller amount each month without needing to find a large sum of cash upfront
You want to hold on to your car for a good few years
Your circumstances are unlikely to change, so you’re confident you won’t incur early termination charges
You want to build equity and have something to show for the money spent
The hassle of reselling a car isn’t for you – you simply want to return the car when your lease term is over
Avoiding high costs in the long-run is more important than one large outlay
Need peace of mind there’ll be no surprise fees (for example, repair charges at the end of a lease)
Prefer a simple sales transaction over potentially complicated leasing contracts
Could a personal loan make the cost of a car more manageable?
Get access to the funds you need quicker with a personal car loan. Borrow between £1,000 and £35,000 and spread the cost over 2 to 7 years. With low rates starting from just 7.4% APR Representative (£7,500-£25,000), you could find yourself in the driving seat of your dream car sooner than you think.