Having a car is a vital part of modern life. A lot of us drive daily and rely on our vehicles to do almost everything. In recent years, leasing has become a popular way of obtaining a car, but is it any better than buying or financing your next car? What are the benefits of owning a car? Here are our two cents on the debate.
Leasing a car
You can think of leasing like renting – you make monthly payments which give you use of the car until you are ready to give the car back.
• You get newer models of a car that you might not be able to buy otherwise.
• You make smaller repayments than when you buy a car.
• You can change the car you drive (hassle-free) every few years.
• You get tax advantages if the car is being driven for business purposes.
• There are mileage restrictions that form part of your lease contract if exceeded these will incur an additional fee.
• You end up paying more than what the car is worth, as you lease it during a period of rapid depreciation.
• You are committed to completing the whole length of the loan.
• You must return the vehicle in showroom condition – that means no alterations and no accidental stains or scuffs. Any changes will incur an additional fee.
• Your car insurance will be higher.
Leasing is a good option for those that aren’t concerned about owning a car but would prefer to drive a new model every few years.
Buying a car
Buying a car is where you purchase a vehicle outright without any agreement or contract in place.
• You can make any changes to the model (aesthetic or mechanic) that you see fit.
• In the long run, it is the cheapest way to buy a car.
• There are no mileage restrictions.
• The car is a financial asset and you can sell it at any time.
• Owning a car gives you the freedom to do what you want with it.
• You have less protection than the consumer rights that come with a finance agreement.
• You must pay a lump sum for the car in one go.
• Your car loses value as it depreciates, losing around 60% of its value in the first three years.
Put simply, buying a car is a good option for those that can afford it and want the freedoms that come with upfront ownership.
Financing a car
Financing the purchase of your car is a great way of getting ownership of the vehicle without making one lump sum payment.
• Financing allows you to spread the cost of a car and make affordable monthly payments throughout your agreement.
• Making regular monthly repayments on a finance agreement is a great way to improve your credit score and prove your financial responsibility.
• You have the option of owning your car at the end of your agreement.
• The monthly payment can be higher than a lease option.
• You can end up paying more than what the car is worth if you take on the wrong finance option.
• Some finance agreements have restrictions on how you can use the vehicle.
There is no right and wrong when it comes to getting a car. We understand that it depends on any number of individual circumstances. Leasing is an affordable option for those that aren’t concerned with owning their vehicle. Buying outright requires the upfront cash but it does give you outright ownership and allows you the most freedom.
Financing is a great option for people that want to own their vehicle but don’t want to make one large payment. If you’re looking at potential finance options for your next vehicle, why not get in touch with our team here at My Car Credit – our specialist advisors would love to hear from you.