More and more drivers are weighing up whether it's better to buy or lease a brand-new car. We know which we prefer, but buying and leasing each have their own benefits and potential drawbacks and which best suits you really depends on your preferences and circumstances.
Whatever your position, there are a few things you should consider before you make your decision.
|Lower up-front cost|
|Brand new car|
|Delivered to your door|
|New car every few years|
|You own the car|
|You can sell the car|
|No mileage costs|
The costs of initial rental are usually much lower than the deposit for a brand-new vehicle – and certainly much cheaper than saving up to buy the car outright. The ongoing lease cost tends to be lower, too - and it’s fixed each month, so you know what you’re paying.
Road tax and breakdown cover are included in the monthly lease price and your MOT and other maintenance costs can also be included in your lease package (for an additional fee), so you don’t have to pay out separately when the time comes. If you’re a business customer, you may also get tax benefits through business contract hire agreements.
Having a brand-new car means that you can enjoy all the latest entertainment and safety features – and you don’t have to worry about the car’s history like you do with a used car. What’s more, you get the reliability and fuel economy of a new car.
Your lease car is delivered to your door, ready to go. Even better, you don’t have to worry about selling it when you’re finished with it – you can just hand it back at the end of your lease and pick another new car (subject to status).
Who doesn’t love the feeling of driving a new car? At the end of your lease, you can pick out another brand-new car (subject to status) and enjoy all the benefits all over again and you never have to worry about depreciation.
This seems like an obvious one; on a contract hire agreement, there is no option to purchase the vehicle so you must return the vehicle at the end of the contract.
Wear and tear is still your responsibility, like it would be if you owned the car. You can read more in our leasing wear and tear guide.
You must make your monthly requirements and if you have a poor credit history, you may also find it difficult to pass the leasing finance process – and you can’t just save up and pay the whole cost up front like you can if you’re buying.
When you’re agreeing your lease contract, you set your annual mileage limit. If you exceed this during your contract, you’ll need to pay excess mileage charges as an additional cost on top of your monthly contract fee.The cost will have been outlined in the process of agreeing your lease, but the extra cost can still come as a bit of a surprise if you’ve clocked a lot of extra miles.
Find out more about excess mileage charges.
Depending on how you buy it, the car is yours from the moment you drive it home. That pink V5C document means you’re free to make any legal customisations you want.
Because you own the car, you can sell it whenever you want. So, if you want to upgrade, change models, or just need the cash, you’re free to arrange the sale and agree the highest price.
There’s no limit on the number of miles you drive, so you don’t need to worry about extra costs on top of what you’ve already paid for the car. You only need to think about mileage for insurance and maintenance.
New cars lose their value dramatically, so your car starts to lose value as soon as you buy it. In fact, most cars depreciate fastest in the first year of ownership. This means that, unless you’re buying a classic car, your car is unlikely to ever be worth as much as you paid for it and you won’t make back what you paid when you come to sell.
Even if you’re paying for the car over many months, the lump sum up-front is often much more than the initial rental on a lease car.
Unlike with a lease contract, breakdown cover and road tax need to be paid separately to the cost of the car. Unexpected post-warranty repairs can be costly, especially if they start to accumulate as the car gets older.
After a few years, your new car will just be your car and as it gets older it’s more likely to experience mechanical, electrical and computer issues. This is largely due to wear and tear and ageing components, and it means that your wallet is likely to take more of a hit the longer you have the car
It’s not always easy to sell a car and there are many pitfalls you need to avoid on the way to a successful private sale. There are services that take away much of the labour, but they also take some of the money, making the whole process that bit less worthwhile.