The whole car finance vs. car leasing debate has been raging for decades. For some, it simply makes sense to enter into an agreement where you’ll ultimately become the owner of the car. For others, vehicle ownership is exactly what they’d prefer to avoid.
Hence, deciding whether to go with car leasing or car finance can be difficult. In terms of which is better, you’ll get a whole bunch of different answers, depending on whom you ask.
What is the difference between car finance and car leasing?
In the simplest terms, car leasing is effectively a form of long-term renting. When you lease a vehicle, it remains the sole property of the service provider and you are simply paying to ‘borrow’ it. With car finance, you’re able to spread the costs of the vehicle over a period of months or years, after which you take ownership of it.
Again, both options have their own unique advantages and points of appeal. All of which should be carefully considered, before deciding which way to go.
The Advantages of Buying with Car Finance
· Ongoing reductions in insurance costs
· Eventual ownership of the vehicle
· Car can be sold or traded in against a new car
· No more payments at the end of the term
· Freedom to modify the vehicle
· No limitations on mileage
The Advantages of Car Leasing
· Initial deposits low or excluded
· Considerably lower monthly repayments
· Upgrade to a newer car at the end of the term
· No maintenance or servicing costs
· No concern over depreciation
· Higher-end vehicles can be affordable
Roughly summarized, the differences between the two options and their respective advantages are relatively simple. When you lease a car, you benefit from lower monthly repayments and you don’t have to worry about servicing or maintenance costs. However, you never become the rightful owner of the vehicle.
With car finance, you pay a somewhat higher monthly payment and it’s up to you to repair and maintain the vehicle as necessary. Nevertheless, you then become the rightful owner of the vehicle at the end of the term and can do whatever you want with it.
So…Which is Better?
Realistically, therefore, you cannot say outright that leasing or purchasing a vehicle represents the ‘better’ option. It all depends on your personal preferences and circumstances at the time. For obvious reasons, businesses often prefer to lease vehicles that are technically somebody else’s responsibility to look after. By contrast, the everyday motorist may prefer an option that opens the door to full vehicle ownership.
Whichever way you go, it’s advisable to first use an online car finance calculator to establish your budget and requirements. After which, an independent broker can compare the market on your behalf and point you in the right direction