Like all financial decisions, the right one for you will differ depending on your individual circumstances.
Whilst buying a car may be preferable and more beneficial than leasing to one person, it might not be to another.
The benefits of leasing a vehicle
- You need less money upfront
- Your maintenance costs are included in your monthly payment
- There is no obligation to buy at the end of the lease term
- You always get to drive a new car, with the added benefit of manufacturers warranty meaning its unlikely your car will encounter any issues
The disadvantages of leasing a vehicle
- You may only be allowed to drive a certain number of kilometres until you have to pay an access
- You aren’t able to do any modifications, as you don’t own the car
- It’s not an asset, as you don’t own the vehicle so won’t help with other borrowing power
The benefits of buying a vehicle
It is an asset – you own the car! Which is beneficial when looking to get other finance such as a mortgage or other borrowing
You can make any modifications you like, such as new wheels
You can sell it. As you own it, you can also sell it whenever you like.
There are no driving kilometre limitations.
The disadvantages of owning a vehicle
- You are liable for maintenance costs and any repairs once the car is out of warranty
- Your choice may be limited to your budget
- Cars depreciated in value a lot, which may not be ideal if you don’t plan on owning the car long term
The decision to buy or lease a car will depend on your individual circumstances.
For most people, buying a car will be preferable as this is an asset that you own.
However, in some circumstances where you change your vehicle every couple of years or drive a car for business purposes, leasing may suit you.
Like any financial responsibilities, if you are unsure you should seek financial advice before making any decisions.