Pros and Cons of Leasing vs Buying a Car

leasing versus buying — Image Source: Freepik

The decision to lease or buy a car is one of the most important you’ll make when it comes to your vehicle. Weighing the benefits and drawbacks of each is the first step in deciding whether you want to lease or buy. So, before you sign on the dotted line, here are some things you need to know about leasing versus buying.

Pros and Cons of Leasing

Pro: New Models for Less Money

One of the biggest advantages of leasing is that you can drive a newer model without ever having to pay the full price of a new car. Newer models tend to be more efficient and have more features than older models, making your driving experience safer and more enjoyable.

Pro: Lower Monthly Payments

If a lower monthly payment is your main concern, leasing will be your better option. This is because lease payments are usually much lower than loan payments. When you lease a car, you simply pay for the use of it.

Pro: Potentially Lower Taxes

One of the biggest perks of leasing a car is that your lease payments are tax deductible. This is because leases often have lower monthly payments than loans, which can translate into lower taxes.

Pro: Stress-Free Maintenance

Another major pro of leasing is that you’re usually guaranteed factory warranty coverage that lasts three years. The warranty covers most repairs or even replaces the car if something goes wrong.

Pro: No Resale Hassles

Another pro is that you don’t have to worry about selling the car at the end of the lease; you simply return the car to the dealership and they handle everything else.

Con: Additional Fees & Costs

If you’re leasing a car, there may be mileage restrictions on how much you can drive each month. If you go over the allotted amount of miles, your lease will be terminated early, and you’ll have to pay fees for excessive use.

Additionally, there are fees for any wear and tear that’s considered “excessive”.

Con: Lack of Control

If you decide you don’t like the car or can no longer pay for the costs, you may face additional charges. Terminating a lease early can likely result in thousands of pounds in early termination fees and penalties, all of which must be paid at once.

Con: No Ownership

When you lease a car, it is not yours. It can be used for the rental period but must be returned at the end unless you decide to purchase it.

Infographic created by O’brien Toyota

Pros and Cons of Buying

Pro: Ownership Benefits

If you buy a car, you own it. You can do whatever you want with it: drive it as much as you want, add personalized parts and upgrades, and sell it if you want to upgrade or change vehicles entirely.

Pro: No Restrictions

Owning your car means you’re not locked into a specific contract, so you don’t have to pay for fees related to mileage or wear and tear on your car. Since it’s yours, you can pay for service and repairs on your own schedule.

Pro: Total Control

You have total control over your vehicle. You can choose a car that perfectly fits you and your lifestyle, whether it’s a sporty SUV or an economical sedan. Buying also offers flexibility if you need to sell before the term is up.

Pro: Long-Term Cost

Buying usually involves lower initial costs for insurance and registration fees than leasing does. Buying a car and holding onto it for as long as possible is cheaper overall in the long run.

Con: Rapid Depreciation

The car will lose value over time, and you’re not guaranteed to be able to sell it for what you paid for it.

Con: Higher Monthly Payments

The biggest drawback of buying a car is that you’ll have to pay more money upfront. The monthly payments for a loan are usually always higher than a lease because you’re paying for the entire purchase price of the vehicle, including interest and other financing costs, fees, and taxes.

Con: Running Costs

When you buy a car, you’re responsible for all routine maintenance costs, which can add up to several hundred pounds per year, depending on what kind of vehicle you drive.