When preparing to purchase a vehicle, the most common dilemma faced is whether to lease the vehicle or buy the vehicle. Both options present attractive advantages, along with some disadvantages. An example of the lease vs buy dilemma can be applied to a vehicle of any value. If you are planning to purchase a vehicle that is worth £10,000 or a vehicle that is worth £60,000, there are two main ways to pay for this vehicle.
Whether you plan to lease or buy, you will most likely be making a monthly payment. If you choose to lease the vehicle, you will be paying a lower monthly fee but you do not own the vehicle. If you choose to buy the vehicle, your monthly fee will be higher, but it will be yours once you complete the payments. When considering both options, it is extremely important to understand the similarities and differences between leasing a vehicle and buying a vehicle.
When people decide to lease, they often do because of the short term benefit of paying less upfront, and lower monthly payment that they would have otherwise not been able to afford. Typically leases run for 3 to 4 years, and at the end of this period the car is returned to your dealer, so it is effectively a rental.
Because you are not paying the total cost of the vehicle, the monthly payment for a vehicle that is leased will be less than that of a vehicle which is bought. However, there are several factors to consider about leasing:
You do not own the vehicle; therefore you cannot make any modifications or customizations to it
If you get tired of the vehicle, you still have to keep it until the end of the lease term or face a large penalty.
You will have a set amount of miles that you can drive during the term of the lease, and if this is exceeded, you will be required to pay for each mile over the original total.
You may be charged if the car is returned in an unacceptable condition. Although general wear and tear is expected and not charged, you may be charged if any of the following conditions are
When buying a vehicle, most individuals take out a loan to pay for the vehicle, and then make monthly payments on the loan.
When you buy a vehicle, it is yours to keep as long as you make the monthly loan payments. You are free to drive as much as you want and make any customizations to the vehicle.
A monthly loan payment is always higher than a lease payment. However since you are not limited to the same 3-4 year leasing period, you may mitigate the cost of the monthly by taking a loan over a longer period, e.g. 5 to 10 years.
When you get tired of the vehicle, you have to sell it on your own. This is not as difficult as it used to be with online car sales websites, and there is also the option of trading your old car in for the new one.
Before you make the decision to lease or buy a vehicle, it is important to consider the pros and cons of each option. However, in the end, the decision to lease or buy a vehicle comes down to personal preference and what you consider important when purchasing a vehicle.