Is Leasing a car better than buying?

Are you in the market for a brand new car and are wondering whether leasing a car is better than buying? As a driver, there is nothing more satisfying than knowing that you own the car you are driving but for those of us who can’t buy a car outright, we have a few options to consider. A few years ago when I was thinking of getting my first car, I pondered this very question, is leasing a car better than buying? After a few years of soul searching, I realized either depends on your financial status.

Both leasing and buying a car have their own advantages and disadvantages, leasing for most is advantageous than buying the car outright. There are many dealerships out there offering wonderful leasing deals to match your budget. We’ve been looking at *Willow Leasing Deals for our next car for a period of 2 years and cost-wise its the most practical financial option we can afford. If like us you can’t afford to buy a car outright, we’ve listed both the advantages and disadvantages of leasing a car.

*Disclosure: This is a sponsored post written in collaboration with Willow Leasing, all opinions shared are 100% my own.

Is Leasing a car better than buying?

Back when I was still a new driver, I had no insight into buying a car and some of the options available to those who either couldn’t afford to buy a car outright or don’t wish to purchase a car and wish to change up every few years. For many years, I confused leasing with car hire, in principle its similar but in actuality it is different. Below I will try to explain the difference between car leasing and car hire as well as answer the question – is leasing a car better than buying?

Timeframe of Use

When you lease a car, you lease it for a long term basis (2years+) whether for personal or business use. Whereas for a car hire you more often than not hire it for a short period (day to weeks) of time like on holiday or moving house etc. You can only lease a car from a car dealership and for car hire, it’s from a specialist vehicle rental company.

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Mileage Limit

When you lease a car, you agree at the start of the contract the mileage limit per month but this is not the case for car hire. With car hire, there is no limit to mileage but in most instances, you only hire a car for a few days or weeks. Another difference is that with leasing a car, you get charged extra for going over the agreed mileage so this could end up being costly.

Remeber VAT is NOT included

When you hire a car, VAT is included in the cover price of the car hire cost but with most leasing companies this is often not included. Therefore, when considering to lease a car and even though the monthly payment will most certainly be cheaper, make sure you add VAT 20% to the monthly fee.

Advantages & Disadvantages of Leasing a car

• Has the lowest upfront cost for upmarket models but you won’t own the car at the end of your leasing period, you will just be a driver throughout.
• VAT for businesses can be claimed back but is not often included for personal usage so add 20% to the total cost.
• Road tax and often breakdown cover is included in your leasing price but remember you will have limited mileage and will cost you more if you go over the agreed mileage
• The manufacturer’s warranty covers you throughout the term of your deal but if you were in an accident, insurance cover is often lower than the dealership, therefore, you have to pay the difference.

Leasing could be for you if you can’t afford to pay a big upfront cost or pay for the car outright but it may cost you more if you cause any cuts, dents or go over the mileage. Car hire and leasing are not the same, you hire for a short period of time (days to weeks) and your lease for a considerable time frame (years).

I know people who move country every 2 years and prefer to lease a car for that duration than buy one outright or go into a personal contract purchase (PCP). If you are in this situation or prefer to change your car to newer models every so often and don’t mind NOT owning the car at the end of the lease then leasing might be for you.