If you’re in the market for a new car and looking to reduce your expenses, you may be considering leasing.

Car leasing is a popular option in the UK, and demand is expected to keep growing during 2024, as people look for more cost-effective ways to drive their ideal car.

Not sure whether leasing is the right option for you? In this article, we’ll explain the pros and cons of leasing versus buying a new vehicle, helping you to make an informed decision about which option suits you best.

What is car leasing?

Car leasing is a popular alternative to buying a new car. When you lease a car, you enter into a lease agreement for a fixed time and at an agreed monthly cost. This allows you to drive a brand-new vehicle without the commitment or expense of owning it.

How does leasing a car work?

If you’ve never leased a car before, you’ll need to know more about the process before deciding if it’s the right option.

So, how does leasing a car work? Let’s find out.

Car leasing is a type of financial agreement. When you lease a car, you pay one advance payment and then a fixed monthly cost for the length of your lease. The advance payment can be agreed upon at the start of the lease; the more you pay up-front, the lower your monthly cost is. Your fixed monthly payments cover the cost of financing the vehicle, depreciation, registering the vehicle, vehicle excise duty, and a full manufacturer’s warranty. You may also be able to add on an optional cost for maintenance, servicing, and tyre repairs.

When you lease a car, you will never own the vehicle. At the end of your lease, you either hand the car back or exchange it for another one.

Is it better to buy or lease a car?

When deciding whether to buy or lease a car, several important factors must be considered. Both buying and leasing have advantages and drawbacks; the best option for you will usually come down to your budget and personal preferences. Let’s examine how the two options stack up against each other.

Cost

Buying a car, especially a brand-new car, requires a much higher upfront cost than leasing. Taking out a loan or car financing to buy a new car usually requires both a higher down payment and higher monthly payments. The monthly payments to lease a new vehicle are usually much more affordable than if you were buying, but you will not own a car once the payments end.

Depreciation

New cars lose value very quickly. If you buy a new car and then sell it three years later, it will sell for significantly less than what you bought it for. The difference between these two prices is the amount the car has depreciated. According to the AA, the average new car has lost around 60% of its value after just three years. When leasing a car, you do not have to worry about the cost of depreciation as you never own the car; the company leasing the car takes the hit for depreciation, not you.

Ownership

Although monthly payments for buying a car may be steeper than with leasing, you own a car at the end of the payments. When you lease a car, you are paying to rent the vehicle; there is no ownership at the end of the lease term.

Mileage

When you lease a car, the lease agreement may have a mileage limit. You may be charged an excess fee if you exceed the mileage limit agreed upon within the lease agreement. Of course, if you buy a car, there are no restrictions on mileage.

New models

Buying a new car is a big financial commitment, so you’re unlikely to switch cars regularly, particularly with the additional depreciation cost. When you choose to lease a car rather than buy, there is less commitment, and you can update your vehicle to a newer model at the end of each lease agreement. This makes it easier to access cars with state-of-the-art technology.

Ultimately, the decision depends on your circumstances and preferences. If price is not a concern and you’re not bothered about frequently updating to the latest model, you may prefer to own a car. However, leasing could be the right option for you if you’re looking for a cost-effective way to drive around in a brand-new car equipped with all the latest mod-cons and technology.

Lease a car from LetsTalk Leasing

Want to learn more about personal car leasing or find out what vehicle you could drive if you choose to lease rather than buy? If so, take a look at our latest lease deals here at LetsTalk Leasing.

We are one of the top leasing companies in the UK, and we offer affordable, competitively-priced car leasing deals on some of the most popular new vehicles on the market today.

If you’ve never leased a car before, then we make the process simple and hassle-free. We pride ourselves in offering the highest level of customer service and a clear and intuitive leasing process. We are always clear and transparent about our fees too – we promise no nasty surprises!

Our trusted service complies with the Financial Conduct Authority and the British Vehicle Rental and Leasing Association.

For more information about our services, contact our team of friendly advisors by calling us on 0330 056 3331 or emailing contact@letstalkleasing.co.uk.