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See the comparison of buying car with cash or with a monthly loan.

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Is a car loan and a new car better than buying an older car outright?

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Benefits of Leasing or Buying a Car

There are many reasons to stop and consider whether to lease or purchase a car in the UK. The common objection against buying a car is due to it being a depreciable asset, whereas leasing you are able to trade-in your vehicle after a select amount of time for a brand new automobile.


Here we will examine the pros and cons of both options to help make a decision that may impact your finances over the next 3-5 years. 


Leasing Pros

  • Brand new car every 2-3 years

  • Depreciation is not a risk due to the renting model

  • Ease of transition to a new vehicle; no selling involved

  • Monthly costs of leasing are generally lower than financing to own


Leasing Cons

  • Lack of ownership and continuous monthly payments

  • Responsibility for immediate payment of damages upon trade-in

  • Lack of flexibility with modifications to the vehicle

  • Ending the lease without refreshing to a new vehicle may be an additional cost


If the lack of ownership is not the only determining factor, it is important to carefully read through the lease agreement and understand the potential finance fees that you may incur upon ending the lease agreement or refreshing with a new vehicle. Now we will look at the pros and cons of purchasing outright / or with a finance loan. 


Buying Pros

  • Ownership with no recurring monthly payments (unless purchased with finance loan)

  • Ability to modify or customise the vehicle 

  • No finance charges caused by ending a lease agreement

  • Significantly lower pricing due to a large used car market in the UK


Buying Cons 

  • Re-sale value of the vehicle is significantly lower year-over-year

  • Out-of-pocket post-warranty repairs

  • Higher monthly repayments if purchased with a finance loan

  • Finding buyers and negotiating the sale of the vehicle


However, with all these pros and cons, the question still remains: is leasing better than buying a car? To answer this complex question, we have designed a Buy vs Leasing calculator to consider a number of important variables in regards to car ownership. With this calculator you are able to input the monthly costs over the given time period to determine if owning a new car every few years is worth having an overhanging monthly payment for the foreseeable future. As outlined as one of the cons of leasing, there may be financial implications for breaking the lease as auto-dealers are able to offer lower monthly rates because they are renting the vehicles. 


In summary, the decision rests with not only the calculator’s output, but lifestyle choices that are optimal or desirable over the next 3-5 years. If you’re concerned with a receiving a stable income, owning a car might be better option. However, if you like to stay up-to-date with the latest style or model vehicle, leasing by far may be more desirable. Take the time to input the variables, sleep on the decision and research carefully as considering to lease or buy is one of the first steps of your journey with car ownership in the UK. 

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