On the hunt for a new car? Whatever make and model you go for, you’ll need to decide whether you want to buy the car outright or lease it for a set amount of time.
Buying a car means it’s yours to keep and you can do whatever you want with it such as drive it, sell it or part exchange it. Leasing on the other hand is where you pay a fixed amount each month to borrow the car for a contracted period.
It’s believed that enquiries for leasing rose 43% at the start of 2022 compared to the previous year and there are several options for these agreements. The first is Personal Contract Hire (PCH), which is where you just borrow the car and then give it back at the end of the contract. The second is Personal Contract Purchase(PCP), which gives you the option to purchase the vehicle at the end of your contract and Personal Lease Purchase where you become the owner once all lease payments have been made.
If you want to know the benefits of buying or leasing a car, so you can make a more informed decision when you get your new vehicle, our guide below can help. Read on to discover the pros and cons of buying and leasing a car.
Buying a car
Pros
- Low-interest rates when buying on finance
- Free warranties for a certain amount of time for your peace of mind
- No restrictions on mileage or wear and tear on the car
- You can modify the car however you like
- The purchase can be used as tax deductions if bought through a scheme at work
Cons
- New cars can lose as much as 40% of their purchase value within the first year
- Driving costs for new cars can be high due to fuel, insurance and maintenance costs
- You may be locked into long repayment terms
- Selling the car can take a while
- If you buy a new car then you may have a long wait time while it’s delivered from the factory
Leasing a car
Pros
- Paying the lease amount on time, every month can be a great way to improve your credit score.
- Lease payments are usually lower than loan payments when getting a new vehicle
- You can drive newer models for less money
- You may be able to get free maintenance with your lease
- No worries about depreciation
Cons
- You’ll never own the car outright
- You have no control over how it looks
- You may have a limit on mileage
- There can be termination fees if you want to get out of your contract early
- You may be charged for any damage to the vehicle