Are you thinking about buying a new car? Then you’re probably considering the best way to pay for it. There are many different payment options available across today’s automotive market, from purchasing outright, to taking out finance or leasing.
If you’re wondering whether leasing a car is the right option for you, you’re in the right place. Here, we explore what leasing a car involves and the advantages and disadvantages of this option.
What is a car lease?
A car lease is an agreement that involves hiring a car for a fixed period – usually between two and five years – at a set monthly cost. This means you don’t own the car, like you would if you purchased it via a finance agreement, you’re borrowing it. At the end of your lease term, you simply give the car back.
Remember, before committing to any new outgoings, you should carefully assess your personal finances to make sure you can realistically afford the monthly payments. It’s important not to overstretch yourself financially, so establish the amount you’re comfortable paying monthly before you start searching.
What are the advantages?
Firstly, you don’t need to worry about selling the car when you want to upgrade. If you fancy driving the latest model of your preferred manufacturer, you can give your car back at the end of the lease agreement and upgrade quickly and easily.
Another benefit of car leasing is you don’t need to contend with depreciation of your vehicle. When you own a car, it will gradually deteriorate in value from the date you originally purchased it – meaning you will get less for it than what you paid when it comes to selling.
Leasing is often a cost-effective option too. Typically, you’ll pay less over the full period of your lease than you would if you opted for a finance agreement, making it attractive to those seeking the cheapest option.
You also have the option to lease a brand-new car. Some leasing companies allow you to configure your chosen vehicle to your own taste and requirements, choosing the spec and trim level you want.
What are the disadvantages?
When it comes to disadvantages, the first to highlight is the simple fact that you don’t own the car. This means that there are no benefits at the end of the agreement like you would get with some finance agreements, such as being able to drive a car with no monthly payments at the end of your contract term.
In addition, you’ll have a fixed mileage allowance with the leasing company. If you go over this, you may have to pay a penalty charge. You will also need to pay for any wear and tear of the vehicle, such as scratches or dents.
Lastly, you will not be allowed to make any changes to the vehicle. Whereas if you own a car, you can make any modifications you please, such as upgrading the alloys or getting tinted windows.
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© Laura Hampson 2020