It depends whether you want to own a car or just have the use of a car. It really comes down to the individual’s circumstances and personal preference.
What is leasing?
Leasing in simple terms is like a long-term rental agreement. With monthly payments, you get to hand the car back at the end. The contract is usually agreed to be between 2-4 years however it depends on what you prefer, the mileage you cover per year and the length of time you want to wait until changing into your next new car.
For many customers who travel large distances in their car, some form of lease works best-as running costs can be built in to one monthly payment. And for the dealership, there is no risk of disposing of a high mileage car when the customer wants to choose another car.
What happens at the end of the lease?
Once the agreed term has come to an end, the customer has two choices. The first option is to extend the lease on the car. This will have to be agreed by the finance company before the end of the contract.
The second option is to hand the car back. If the car is in good condition and the customer has stayed within the set mileage, then the car can be returned.
Usually, if the customer goes over your set mileage the customer will be charged a small fee. (Between 3p-10p per mile.) As well as this, if the car is not in good condition then the customer will be charged the cost to repair the car.
However, a lot of private customers actually want to own their car. Typically, customers who don’t choose to change their car regularly and would rather keep a car until the cost of maintenance starts to increase.
As well as this, the customer has the option to sell the car when they want rather than giving it back to a finance provider. This gives the flexibility of not being in a fixed ownership agreement.
Monthly lease payments are generally less expensive than monthly car loan payments however if the customer prefers to own a car and keep hold of it for a few years, then buying a car tends to be cheaper in the long run, compared to leasing.
It is always best to go over your financial circumstance and take into consideration personal preferences such as wanting to accessorise the car and knowing what car suits you for your day to day routine.