Buying a Car Versus Leasing One

Recently, British motorists have turned away from leasing. The practice hit a peak of around 34% of motorists in 2019, but it’s since dropped to around 19%. Several factors have intervened to drive this trend, including a global pandemic, supply chain headaches, and rises in inflation and interest rates. 

If you’re in the market for a new car, then you might be weighing the relative merits of leasing and buying. Lease, and you’ll get convenience, as well as that new-car feeling. But there are considerable benefits to buying, which are often overlooked.

Ownership

If you buy a car outright, you’ll own it, and be able to hang on to it for as long as you wish. You’ll also be at liberty to carry out any modifications you like. Most leasing agreements put in place severe restrictions on the scope of any modifications, which makes buying the natural choice if you’ve got a specific idea of the sort of car you’d like.

Put simply, owning a car puts you in control of it. You’ll be able to sell up at any time, and you’ll suffer no early termination fees for doing so.

Long-term savings

When you lease a car, you’re paying a premium to the leasing company. This helps them to cover their costs, make a profit, and provide you with the convenience you’re after. If you’d rather put this money in your pocket, however, then buying makes more sense. Once the value of the car is paid off, you’re no longer required to make monthly payments. Plus, you won’t owe the leasing company for accidents that aren’t covered by your insurance.

You needn’t spend a huge amount upfront, even if you are buying a car outright. The used market offers plenty of high-quality options. You can pick up a used Audi, for example, without spending too much.

No mileage restrictions

In order to limit wear and tear, leasing companies will often require their clients to restrict themselves to a certain number of miles over the course of a term. This means that you’ll lose a little bit of flexibility, since going over the limit can result in a hefty surcharge. Many dealers will add this extra cost, based on the number of miles you’ve travelled over the limit. 

A typical limit might be around 15,000 miles per year. This means that you might find yourself restricting your travel toward the end of the period.

Equity

If you’ve taken out a loan to pay for the car, then you’ll be building equity every time you make a payment. If you’re merely leasing the car, then you’ll never end up owning even a small part of it, no matter how many payments you make.