Leasing Vs Buying A Car: What Should Be Your Main Consideration?

BUYING a car is one of the most important decisions you can make, both in your personal life and (albeit to a lesser extent) for your business. From visiting numerous dealerships to hunting online, we are constantly striving to find the ideal car at the ideal price. Whether it be buying outright or leasing, there are numerous ways to own a vehicle. We take a look at the advantage and disadvantages of either leasing or buying a car.

It is a well-known fact that the second you drive a car off the lot it depreciates. New cars will often lose more than half of their value in the first three years of ownership. Such depreciation of cars means that although buying a new car can be cheaper than it once was, it may not be the best deal for you. Your car may be worth less than you believed it could be, so what is your best option?

Leasing a Car

Leasing a car is something that has become increasingly popular over the world in the last few years, with numerous UK dealers now offering consumers the option to lease a vehicle at a fixed monthly payment.

Under a leasing scheme, you can add extra charges based on maintenance and servicing. Leasing also relies on a standard deposit on the car, usually three to four months payment upfront, with the overall initial payment being much lower than the buying a car outright.

One of the major advantages of leasing a car is that following the end of the lease, usually two/three years, the car is handed back to the owner who is then responsible for selling the car, meaning that you can effectively trade in for a new model.

Does It Simply Depend on Depreciation?

Renting a car can prove to be much more expensive than buying a car outright. While monthly payments are relatively low, over the lease you will pay more. However, the advantage of leasing depends wholly on the depreciation of the car and what happens once you want to sell it on.

Research from Which shows that a car such as a VW Scirocco only depreciates by 37% from its original value after three years meaning that it cheaper to buy outright. If you wish to sell a Scirocco after a three-year period, you will normally not make a huge loss at the initial price.

Conversely, the same report found that a Ford Mondeo retains just 36% of its value after three years. This means that when buying this vehicle it is considerably cheaper to lease and the onus of selling the car on remains with the dealer.