Figuring out whether to lease or loan a car can be tricky. There could be pros and cons for both options and it’s highly likely that the right decision for you is totally dependent on your personal circumstances and financial situation.
It’s important to understand the difference between loaning and leasing a car:
- Car loan: this means that you make payments allowing you to eventually own the car once all the repayments have been made.
- Car lease: you’ll be paying for the use of the car rather than the actual car – so you will give the car back when the lease term is complete.
What are the advantages of leasing a car?
If you aren’t worried about owning a car at the end of the term, car leasing could be for you. Some of the benefits of car leasing include:
- Car depreciation: did you know that a car’s value will always depreciate? A new car can start to lose its value as soon as you drive the first mile in it. By leasing a car, this won’t be a concern for you as you won’t have to worry about what it’s likely to cost in years to come or whether unexpected maintenance issues could arise further down the line.
- Application process: generally the process for leasing a car is much quicker than when you apply for car finance. There’s much less commitment involved therefore it’s usually easier and simpler to get approved for a car lease.
- Overall price: although you still get to drive the car that you want, the price of leasing a car is generally lower than when you get a car loan. With car leasing, you’ll also benefit financially from not having to pay costs and fees that are usually associated with owning a car (as you would with a car loan).
- Flexibilty: car loans can often be seen as quite a commitment. If you’re in a transient phase of your life and don’t know how long you’ll need the car for, a car lease could be a great idea. You’ll generally get more flexibility with car lease options than with car loans.
- Choice of vehicle: lower costs and more flexibility often mean that you’re left with a much wider choice of which car you want to lease. You can even change this on a fairly regular basis if your needs or desires change. This is harder to do with a car loan when you are tied to one car for a fixed amount of time.
Car leasing won’t work for everyone and there are many other car finance options that could suit you better. Do a little research and find out which is the best option for you to ensure you get the best deal to get out of the road.