To buy or to lease

When you are in the market for a new car, there are decisions to be made. Do you buy with cash, buy with finance, or lease for a fixed period?

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Use

The important question to answer is what you want from the car. Are you going to put high mileage on the car? If you want a car to travel to and from work, pick the children up from school and use it simply as a method of transportation, you are best to lease. On the other hand, if you are buying the car as an asset thats value will not depreciate too much, it is worth buying.

Lease

When you lease a car, you make an initial payment. This is deducted from the total lease amount and your monthly payments are worked out over the total rental period. When this period has expired, you return the car to the leasing agent – the car never belongs to you. Leasing agreements generally have a mileage clause of around 10,000 miles per year; if you exceed the agreed mileage, you will have to pay a penalty for the extra mileage at the end of the agreement. The car must be returned in good condition; if there is any damage, you will be charged to put it right.

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Buy

When buying a car by hire purchase, you pay a deposit and pay off the value of the car in monthly instalments. The car does not belong to you until the last payment has been made. The deposit is generally 10 per cent of the cars price. You can get flexible repayment terms and the quicker you pay it off, the less interest you will incur.

There are many reliable car leasing firms around the country; for example, http://leasing.totalmotion.co.uk/ offers car leasing in Leicester. Such firms have a large stock of excellent cars for lease at reasonable prices.

The choice of car will also determine whether it is best to buy or lease. Some cars lose their value very quickly, in which case it would be better to lease; however, if a car holds its value – thus having a good resale value – you would be better off buying it. Look at the price of your new car and its predicted resale value after three years to give you your answer.


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