Should I buy or lease a car?


Should I buy or lease a car?

For anybody asking, 'Should I buy or lease a car?', this article will aim to offer an answer.

For most people, it can be a difficult decision about whether they should lease or buy their next car and there are good reasons why contract hire has grown in popularity with UK drivers.

But before you rush into making a decision, let's look at the pros and cons of leasing and financing a car so you can choose the option that suits you best.


Leasing or buying a car

Here, we look at the ownership issues when you buy or lease a car.


Unless you have the cash sitting around, then buying can be a huge financial undertaking.

Lots of people will continue to buy their car because they like the security of owning it.

It will be theirs to keep and they can trade it in or sell it on when they want to get a new car.

Among the downsides of buying a car is the issue of depreciation.

This is the fall in the value of the car from the moment its wheels touch public roads and, depending on how many miles you drive, some cars will see high depreciation of up to 50% over the first three years.


With leasing, you will not own the car and when your agreement ends, you simply hand it back and select another one, if you want to continue with contract hire.

If you don't, then you can look at other car financing options, including choosing to buy.

However, with leasing you don't need all of the car's purchase price upfront, you will need to pay an initial rental.

This amount varies between car leasing firms but with Tilsun Leasing it will be a multiple of one, three, six or nine times of your monthly payment.

If you pay more as the initial rental, then your monthly payment will fall as a result.

Also, the monthly payments on a contract hire deal tend to be a lot lower than using other car financing options.

Mileage issues when buying or leasing a car


The mileage issues that affect a car that you buy will depend on how many miles you drive every year.

Normally, the mileage you rack up isn't a problem because the depreciation is something you will have to deal with.

However, if you drive lots of miles every year, then the depreciation of the car will be greater because it is less attractive to a future buyer and will affect its value.


When you lease a car, you need to tell the car leasing company how many miles you will be driving every year because the amount you pay every month is determined by the depreciation in the car's value.

Most of us tend to drive around 10,000 miles every year so you should select an annual mileage limit for your leasing term that will meet your needs.

With Tilsun Leasing the mileage limits for a leased vehicle are from 5,000 miles, and up to 30,000 miles.

It's a good idea when you lease a vehicle to calculate how many miles you travel every year and then add 10% to that figure so that you have some leeway when you drive more miles than you anticipate.

However, when you lease a car, the annual mileage limit isn't an issue until you hand the car back - but you must be within the agreed limit.

Should you drive more miles than the agreed limit, the car leasing company will hand you a bill for the excess mileage charge - and with some firms, this can be a hefty price to pay of up to 50p per mile.

Most car leasing firms charge a lot less than that, however.


Modifications to your car when you buy or lease


Since you own the car when you buy it, you can carry out any modifications that you want to.

The only issue is that any modifications that are carried out may affect the car's resale value.


Since you do not own the car when you lease it, no modifications are allowed.

You will need to select the approved accessories when your car lease begins and it's unlikely that a car leasing firm will approve any modifications while the contract hire agreement is in place.

Repairs and maintenance when you lease or buy a car


As the owner of the car, it's your responsibility to carry out proper maintenance and any repairs to ensure that your car is roadworthy.

Sometimes, these repairs can be expensive but if you buy a new car, you will be covered by the manufacturer's warranty - and this varies depending on the manufacturer from two years to seven years.


There are two issues to consider when you lease a car when it comes to the repairs and maintenance of the vehicle.

Firstly, you will be responsible for maintaining and repairing the car under the contract hire agreement, as you would do if you had bought the car.

Again, the manufacturer's warranty will still be valid if you lease the vehicle.

One of the big attractions for leasing a car is that you could opt for a maintenance package that will cover the maintenance and servicing costs, including consumables such as the exhaust system and tyres.

For many people, leasing a brand-new vehicle with a maintenance package brings peace of mind motoring, particularly for company car drivers.


Should I buy or lease a car?

As you can see, there are pros and cons to consider for anybody asking should I buy or lease a car?

Here, we've looked at both sides of buying and leasing and for many people leasing a car brings the opportunity of driving a brand-new vehicle every few years and enjoying all of the safety and equipment improvements that come with the latest models.

And with the maintenance package, there's no need to worry about servicing or maintaining the car since all of this is paid for - and there's no need to worry about the car's depreciation, particularly if you drive lots of miles.

If you would like to discuss the benefits of leasing a car, the Tilsun Leasing team is available on 03330 040 888.

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Lex Autolease
Leasing Broker Federation

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