Making the decision to opt for a leased car instead of buying one outright can be hugely beneficial, but is it the right choice for you and your specific circumstances? To help you solve this dilemma, we’ve come up with just five questions you should ask yourself…
- How often do I drive?
Most leasing companies will place a restriction on the number of miles a car can cover per year, which can be anywhere from 10k to 15k. If you’re a commuter or you regularly go on long road trips with friends, leasing might not be the right option for you. However, if you mainly use your car for personal use, this could be the solution that saves you a tonne of money.
- How much money do I have to spare?
Buying a car should be seen more like an investment, in that all the money is given up front, from the car payment to the insurance, initial service and so on. In this sense, it is far more of a risk than leasing a car, because you’re crossing your fingers that everything is fine with it. Leasing requires little or no initial down payment, which frees up far more of your monthly income. Plus, you can change your car every three years for a new model, so maintenance costs and the likelihood of repairs being needed are far lower.
- What are my living arrangements?
Do you live in a busy city where public transport is faster for your commute than driving? If so, and you only need your car for visiting family and friends on weekends, leasing a car for those occasions is more convenient. Then, think about whether or not your circumstances are likely to change. It could be that you plan to move to a quieter suburb in the next few years, in which case, leasing a car means that you don’t have to concern yourself with selling anything when the agreement expires. You simply give it back!
- Do I own a business?
If you own a business then there are even more benefits to leasing a car, as you can claim the tax back on the monthly instalments as a business expense. Some UK car leasing companies, show this clearly on their website by displaying two prices – one for personal contracts, and one with a 20% lower price so that business owners can see how much a car would cost them after claiming.
- Am I likely to cause any damage?
Finally, be honest with yourself about how much damage you’re likely to cause to the vehicle. If you haven’t been driving very long and you’re likely to cause a few scratches, you’ll have to pay for wear and tear damages according to the lease agreement. Always check what this is before signing, but if this sounds like you, buying an older car might be a smarter move initially.
Did our questions help you to make the right choice?