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Lease or Buy?

This is the most frequently asked question when it’s time to renew your car. The answer lies somewhere in between your own personal budget and whether you want a brand new or used car.

Stating the obvious: “If it can appreciate in value – buy it, if it will depreciate in value – lease it

This article will take a look at the ins and outs of leasing a car against the option of buying a car. The article will separately look at business lease cars and personal lease cars. It will also cover advantages and disadvantages of both, plus we will explain at the end why we believe leasing a vehicle proves more beneficial than buying. 

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Business Car Leasing

Taking out business lease cars for your company is probably the most beneficial choice you will make in terms of finance. If your business is VAT registered you can claim this back for starters, for mains you are setting back from spending a big sum of money and utilising it in a more beneficial way to enhance the business, then to put the icing on the cake for dessert you can afford to buy something to impress your clients which you can regularly upgrade every 2 years or so.

You can take a look at a detailed breakdown of advantages and disadvantages below.

Advantages

1. You are able to lease 'nicer' or better quality cars for much less money than it would cost to purchase one. Depending on what you need your business car for, the car leasing option allows you to consider a variety of vehicles that wouldn't usually be in your budget. Because you are only really paying for the depreciation of the vehicle, the monthly payments would be much less than the alternative of buying a vehicle outright. 

2. There is a range of prestige cars available that cost much less than you may think. You and your employees could be driving around in cars such as BMW's and Audi's for a much smaller price than you may have anticipated. This is a great way to raise workplace morale and not only this, but it also is great for the overall company image.

3. You and your employees are able to renew your lease every few years and get a new car each time. This means that you can remain up to date with the latest models of cars and depending on roles within the company, you can upgrade and change vehicles to suit your needs more. 

4. The worry of your vehicle depreciation is no longer a concern when leasing a car. You will not have your money tied up in a depreciating asset as you will not own the vehicle, meaning you have not invested a large sum of money into something that will be depreciating.

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Disadvantages

1. Within business car leasing, you have to consider mileage and condition restrictions. This means you will have to ensure all employees are aware of these guidelines and meet the pre-determined conditions of the lease agreement.

2. It is a recurring cost that you have to pay every month, this means you should consider whether you are in a position to make these regular monthly payments or whether you are interested in doing so in the first place.

 

Personal Car Leasing

This is where you can be a little picky at choosing whatever suits your requirement but affordability plays a big role when you consider personal lease cars over purchasing outright. If you are not considering of keeping your car for more than 4 years than it’s little point of dealing with the hassle of selling it when you can simple return it to the finance company.

The depreciation value on a new car for the initial period of 2-4 years is something that you can’t steer away from so why not finance it and use it to your advantage while you keep the bulk of money in your interest savings account?

Take a look at the full list of advantages and disadvantages below.

Advantages

 

1. Once again, the payment option of leasing is significantly lower than many will first presume. Therefore, personal car leasing is typically a great option for those who do not have a big enough budget for a one-time purchase.

2. There is little to no deposit necessary when personally leasing a car in the majority of lease agreements, which adds to the overall benefit of it being a fairly low-cost option.

3. Like mentioned previously, one of the biggest appeals to leasing a car is the ability to drive away in a car that you would usually not be able to afford. Personally leasing a vehicle that is either new or a 'dream car' is usually the biggest selling points when considering to lease rather than purchase.

4. The car manufacturer warranty usually covers the lease period, meaning the maintenance costs can be covered through this. Along with this, it is normally the case that the road tax is included in the lease, which is one less extra cost that you will need to worry about.

5. Leasing cars are usually a great option for new-time drivers as it is a way for them to afford a car. It also gives a lot of family members peace of mind knowing that they're loved ones are driving safe modern cars when they aren't experienced drivers.

6. There are fixed-price motoring costs that remain the same throughout the lease so you have no worries regarding price inflation.

7. Leasing a car gives you the ability to drive brand new cars every few years; this is a huge appeal when considering the leasing option, especially to younger drivers. 

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Disadvantages

1. Leasing means that you do not have ownership over the vehicle, many drivers prefer knowing they have ownership as it can add a level of comfort.

2. You have to commit to paying regular monthly payments that you cannot miss. This means that those who do not have a steady income may not benefit from personal leased cars.

3. You have to stick to the terms within your contract, this means when you have agreed your annual mileage, you must stay within the maximum. If you do not, you can face additional charges for exceeding the agreed amount.

4. Keeping your leased car in good condition is vital, as at the end of the contract, the wear and tear of the car will be checked and if there is any excessive damage caused, you can be responsible for paying a repair charge.

5. There are, of course, modification clauses; therefore, if you are a fan of modifying and adapting your vehicle, you may have to rethink the leasing option.

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Purchasing a Vehicle

Advantages

1. You own the vehicle, therefore you are able to sell the vehicle when you wish to find a new car. This means you can make some money back off the car when you are ready to move on. This money can then go towards getting a new car, whether it be purchasing or leasing.

2. Because it is your car, you can do with it as you please. Which means you can modify the vehicle to suit you and you can also maintain the car to your standard. If you happen to cause any damage to the car, you will not face any penalties or charges.

3. When you own the vehicle, you have no mileage limits which means that you are not restricted to how often you use the car, or how far the journeys you make.

Disadvantages

1. Unfortunately, when you purchase a vehicle you face large depreciation costs. As soon as you buy a car, the value of the vehicle significantly drops. This is due to the current ecnomony and this doesn't seem to be improving.

2. When you are finished with your vehicle, you do have the hassle of selling it. You can either privately sell it in the hope to get more money, but this can be an inconvenience in itself, or you can sell it to a car buying company, usually for a fraction of what you bought the vehicle at.

3. The costs of any repairs that the car may require, is down to you. Depending on the car, i.e. age, model, make, you can find yourself spending more money than you wish because of this reason.

4. A lot of the time when purchasing a car, you have to settle for a less prestigious car than you may want. This is simply because a lot of people cannot afford to buy premium vehicles outright.

5. If you do choose to purchase a car, but cannot afford the overall cost, many people opt for a loan. Although it is entirely down to personal preference of the individual, having a loan means regular payments that can be fairly costly and interest rates to consider.

We believe that leasing a vehicle has many more benefits than the option of buying. Whether it is business car leasing or personal car leasing, there is a car leasing option out there to suit a huge variety of people. If you are interested in possibly leasing a vehicle, you can read about our leasing order process. Or, if you have any specific questions, you can contact us and speak to one of our experts who would be happy to help.

 

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Posted on 7th October 2015 at 4:03 PM

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