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Lease or finance? The Big Question

It’s an important time in the car market as the new 17-plates have arrived and Summer has all the manufacturers and dealerships vying for your money with big Summer Sales and promotions. All you know is your car is giving up the ghost and a new one is definitely due. You can opt to lease one and pay a fixed monthly fee but you won’t own the car at the end and if anything happens to it, you’ll get a replacement vehicle. With leasing, the contract will have set rules on mileage and you’ll occur charges if you go over this. It’s usually cheaper than financing a vehicle outright as you are effectively renting the vehicle, it doesn’t belong to you. This type of contract is usually preferred by people who like to change their vehicle every few years.

To help you decide if leasing or purchasing a vehicle is the right option for you, ask yourself the following questions:

How often do you 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 worth the extra charges or ppi. However, if you mainly use your car for personal use and nipping into town occasionally then this could be a money-saving solution.

How much money do you have spare?

Buying a car is seen as an investment, in that all the money is given at the beginning from the deposit, the service, and the initial payment and nothing can be given back until you sell the car, hopefully for a similar price. Buying is a financial risk because you can never quite know if there is anything wrong with the car before it’s too late. When buying a car with monthly payments, a large deposit will be asked which is usually much lower when leasing, meaning a huge section of your wages won’t be taken. Plus, you can change your car every three years for a new model, so maintenance and the likelihood of repairs being needed are far lower.

What are your living arrangements?

If you live in a busy city where public transport is widely available and much faster than your daily commute then buying a car will only be needed for evenings and weekends. In this situation, a lease agreement with lower mileage would be suitable so you’re not paying for what you don’t need. If your situation is likely to change and you could be moving out of the city into a quiet suburb then a car will become much more of a necessity to get around and leasing means you won’t have to worry about selling it at the end of the agreement. Some leasing companies even offer upgrades or part-exchange deals so if you find yourself suddenly needing a larger or smaller car due to family circumstances changing then you won’t need to bother yourself with selling and finding another good deal or paying off the rest of a contract.

Are you a business owner?

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.

How likely are you to cause 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 or you’re not a confident driver and you’re at risk of causing a few scratches you’ll have to pay for wear and tear according to the lease agreement. Always check what this is before signing, but if this sounds like you, buying an older second-hand car might be a smarter move financially.

Test Driving

If you want to get a good feel for the car, some dealerships and manufacturers will allow a short test drive of the vehicle prior to signing anything. But if you’re smart you can hire the car for the full day for a very cheap price from a local car hire company and experience a whole day out in the same car. Things like loading the boot, getting in and out of the back seats, driving on the motorway, etc. need more than just a 20-minute test drive under the scrutiny of the salesman. With full cover insurance at a rental company, you can take the car for as long as you want knowing you’re safely covered should anything happen to it. If you don’t like it at the end, you’ve made the right choice in not buying or leasing it and it’s only cost you a day’s rental!

If you’re interested in testing a car with Easirent, take a look through our Fleet for the make/model/size you’re looking to buy and give our Reservations team a call to book on 0800 075 80 75.



    



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