What is car leasing?
When you buy a car, you’ll either buy it outright, or you’ll pay it off over a longer period of time. With leasing, you instead pay a monthly lease for a new car. After a set period of time, you’ll replace it with another brand new car.
Leasing isn’t for everyone, but there are many benefits to it. So is it right for you? To help you decide whether you’re better leasing or buying, let’s take a look at some of the pros and cons of leasing.
Pros of Leasing a Car
You’ll always drive a new car
This won’t just make you look and feel amazing. It’ll also mean that you’ll only ever drive the safest, greenest, and most advanced models. And if your car never gets too old, you won’t have to worry about ongoing maintenance. You can swap your car for a new one long before wear and tear becomes an issue.
You can afford a nicer car
Leasing a car could enable you to drive the car of your dreams tomorrow – the car you thought you’d never be able to afford.
According to one study, around 75% of luxury cars are leased. Ever wondered how people can afford to drive such high-end cars? It’s most likely because they’re leasing, rather than buying.
Fewer upfront costs
Leasing can cost you less upfront, and less each month, than buying. Down-payments for lease cars are invariably lower, if you even have to pay them at all. Monthly costs are likely to be lower too.
It depends on who you lease with, and what sort of car you lease. But for many people, leasing can be a more affordable option than buying – in the short term at least.
Better budget control
When you lease a car, you’ll know exactly how much money you’ll have to set aside each month for driving. All your payments will be rolled into one neat package. Some leasing providers even provide breakdown and maintenance cover as part of the package.
You’ll still have to sort your own car insurance, and you’ll still have to think about fuel payments. But beyond this, your leasing provider will take care of everything, and charge you a single fee for the lot.
Avoid many motoring headaches
Cars don’t need an MOT until they’re three years old. If you routinely trade your leased car for a newer model, you’ll never have to worry about MOTs. Ever.
And this isn’t the only hassle you’ll avoid through regularly swapping your car for a newer model. You may never have to pay for new tyres, or a replacement battery, either.
So if leasing brings so many benefits, why doesn’t everyone lease?
Because there are some clear downsides to leasing. And some of them are so serious that many financial and motoring experts recommend avoiding leasing altogether.
Cons of Leasing a Car
Too many limitations
Many leasers set limits on the number of miles you can drive over the course of your lease. If you exceed this limit, they’ll charge you extra. Some leasers apply a charge for every mile you travel beyond the limit they’ve set.
For many drivers, these limits won’t be a problem. You won’t drive for long enough to ever hit the limit. But if you have a long commute, or if you routinely travel long distances, then these limits should make you seriously reconsider leasing.
The figure you lease your car for is often set in stone. No matter what happens, that’s the amount you’ll have to pay for the car.
Say you lease a car and you’re involved in a serious accident. Your comprehensive car insurance should take care of repairs, and other expenses. But if you lease a car, you’re going to run into some issues, as you’ll probably still be required to pay back the full lease amount.
Even if your insurance pay-out is less than what you owe, you’ll still be liable for the full amount. This could leave you seriously out of pocket.
Leasing is often the more affordable option for motorists. But if things go wrong, the system can really let you down.
You’re always responsible for payments
When you lease a car, you enter an agreement – that you’ll pay a set amount each month in exchange for the car. But what happens if you lose your job, or if you enter a period of financial hardship? Bad news: You’ll still be liable to pay the full lease amount.
If you can’t pay, your leasers will most likely take your car away and sell it. And if the car sells for less than the amount you owe, guess who’ll be responsible for paying the difference.
Leasing can be a cost-effective approach to driving if you’re on a tight budget. But again, if things go wrong, your leasing situation could make a bad situation worse.
The car will never be yours
If you lease a car instead of buying it, the car will never truly be your own. Well, so what? Who cares, so long as you get to drive a new car?
The problem is, not owning the car you drive comes with some downsides. You’ll still be responsible for repairs, so you’ll still be investing in the car. But when you turn that car in, you won’t get any return on this investment. The leasing company probably won’t offer you a discount in exchange for keeping the car in such good condition. But they will charge you extra for wear and tear, so you better not spill anything for the duration of your lease.
Also, at the end of your leasing period, the leasing company might give you the option to buy the car outright. If you choose to do this, you’ll end up having paid considerably more for the car than you would have had you chosen to buy in the first place.
So Should I Lease a Car?
Leasing can save you money, but only really in the short-term. It means you can drive a more advanced and luxurious car than you might have thought possible. But at what cost? In short – your security and peace of mind, should anything ever go wrong.
It’s up to you to decide whether leasing is the right decision for you. The alternative, of course, is buying. But even then you have a lot of decisions to make. Should you buy a brand new car? Or a nearly-new car? Or should you go for a used car? We put together a detailed infographic to help you weigh up your options. Find it here.
Whatever you choose you’ll need insurance. Whether your are looking for your first car insurance or you’re an experienced driver, Go Girl can help.