Lease or buy a new car ? - Car Leasing Article
Are you looking to buy a new car and you’re not sure whether to lease or buy it? This article highlights key questions
to ask yourself, to help you decide whether to lease or buy a new car.
In the past, car leasing has mostly been associated with large corporate businesses. But nowadays smaller businesses and self-employed people are also taking advantage of the benefits leasing has to offer. As are many private individuals.
The concept of leasing is relatively new to many people - However they are aware of its popularity as a means of funding a new car. This leaves people unsure of the best way to finance their next car.
Leasing and buying are very different. And what’s right for one person or business, isn’t right for another. Therefore you should ask yourself these questions before committing either way.
Is car leasing right for you? Questions to ask yourself:
1) Do you want to change your car regularly?
Leasing is ideal if you enjoy driving the latest cars and want to replace your car every two or three years.
It’s great for businesses that want to create a successful image by having new cars and for high mileage drivers. It’s also good for private individuals who want to look good by having the latest car.
2) Do you want low monthly payments? If you were taking out a loan or HP to buy a car outright, your monthly payments would typically be more than monthly leasing payments. This means you can either save money, or you may want to take advantage of driving a more prestigious vehicle?
3) Do you want to avoid high depreciation costs?
Brand new cars on average depreciate up to 60% in the first 3 years. With leasing, you are only paying to use the vehicle - thus avoiding ownership for the total depreciation costs.
4) Do you like trading or selling used vehicles?
If you don’t, then leasing is ideal. As you simply hand your car back to the leasing company at the end of the lease – you won’t have the hassle of selling it or accepting a low payment in part exchange. At this point, most people take out another lease and enjoy driving a brand new car again.
5) Do you want a car which is always covered by warranty?
A leased vehicle will always be covered under the manufacturer's warranty (providing the lease is 3 years or less and within the warranty mileage - usually 60,000).
This gives you the peace of mind that if a fault occurs with the vehicle, it should be covered under the warranty.
6) Do you have a stable and predictable lifestyle / business?
When you lease a car, you agree to lease it for a fixed period of time – usually 2 or 3 years. If you need to come out of your lease early, you may be charged an early termination fee.
You also need to estimate your annual mileage as accurately as possible. If you do over your agreed mileage, you could be charged excess mileage when you return the car. If your circumstances change and you find yourself doing a higher mileage, you can amend your mileage during your contract. However this is likely to increase your monthly payment.
7) Businesses - do you want to free up cash flow?
Leasing is a great way to free up valuable cash flow - Enabling you to invest money in other areas of your business.
Also, if you want to free up your credit lines, off balance sheet funding is available with Contract Hire. This will help your accounts look like you don't have too many loans - freeing up credit for other things.
In the past, car leasing has mostly been associated with large corporate businesses. But nowadays smaller businesses and self-employed people are also taking advantage of the benefits leasing has to offer. As are many private individuals.
The concept of leasing is relatively new to many people - However they are aware of its popularity as a means of funding a new car. This leaves people unsure of the best way to finance their next car.
Leasing and buying are very different. And what’s right for one person or business, isn’t right for another. Therefore you should ask yourself these questions before committing either way.
Is car leasing right for you? Questions to ask yourself:
1) Do you want to change your car regularly?
Leasing is ideal if you enjoy driving the latest cars and want to replace your car every two or three years.
It’s great for businesses that want to create a successful image by having new cars and for high mileage drivers. It’s also good for private individuals who want to look good by having the latest car.
2) Do you want low monthly payments? If you were taking out a loan or HP to buy a car outright, your monthly payments would typically be more than monthly leasing payments. This means you can either save money, or you may want to take advantage of driving a more prestigious vehicle?
3) Do you want to avoid high depreciation costs?
Brand new cars on average depreciate up to 60% in the first 3 years. With leasing, you are only paying to use the vehicle - thus avoiding ownership for the total depreciation costs.
4) Do you like trading or selling used vehicles?
If you don’t, then leasing is ideal. As you simply hand your car back to the leasing company at the end of the lease – you won’t have the hassle of selling it or accepting a low payment in part exchange. At this point, most people take out another lease and enjoy driving a brand new car again.
5) Do you want a car which is always covered by warranty?
A leased vehicle will always be covered under the manufacturer's warranty (providing the lease is 3 years or less and within the warranty mileage - usually 60,000).
This gives you the peace of mind that if a fault occurs with the vehicle, it should be covered under the warranty.
6) Do you have a stable and predictable lifestyle / business?
When you lease a car, you agree to lease it for a fixed period of time – usually 2 or 3 years. If you need to come out of your lease early, you may be charged an early termination fee.
You also need to estimate your annual mileage as accurately as possible. If you do over your agreed mileage, you could be charged excess mileage when you return the car. If your circumstances change and you find yourself doing a higher mileage, you can amend your mileage during your contract. However this is likely to increase your monthly payment.
7) Businesses - do you want to free up cash flow?
Leasing is a great way to free up valuable cash flow - Enabling you to invest money in other areas of your business.
Also, if you want to free up your credit lines, off balance sheet funding is available with Contract Hire. This will help your accounts look like you don't have too many loans - freeing up credit for other things.
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