The Fundamental Differences Between Car Lease and Buy


Pros and cons exist for both buying and leasing a car and which is right for you will depend on your situation. There is a preconception that car leasing is only for business vehicles, but that’s simply not the case. More and more people are looking at leasing their personal car, mainly for the same benefits that businesses enjoy, but you need to be aware of the fact that you never actually own the car you drive when you have a lease.

Car ownership is an important part of life for some people, but as our lives become transient, the need for a car parked outside our home and depreciating may not be a practical solution if we don’t know what we want to do from one year to the next. Even families that have a main first car are looking at leasing as an option instead of buying a cheaper second car and here are some of the reasons it makes sense to lease instead of buy.

No Responsibility for Repair Bills

This is not strictly true for all leases because some will have a clause that states you need to keep the car road-worthy and that means changing tyres and other wear and tear parts. However, it does mean that major repair work is usually the responsibility of the car leasing company and that’s part of the reason they always provide brand new cars that are under warranty.

No Need to Worry About Depreciation

Assuming you need a second car that you don’t want to spend a great deal on, a leased private car may actually work out cheaper and less hassle than buying something with a few more thousand miles than you are comfortable with and gambling on how mechanically sound it is. It’s fair to assume that you can get the same deal from the manufacturer if you buy the car new from a dealer and that’s right, but you will lose a few thousand pounds of the price you pay for the car the moment you drive it off the forecourt.

Cheaper Initial Costs and Monthly Payment

The initial deposit required is a problem many people have when buying a new car. When leasing a car, people will usually need to pay around the cost of six months lease up front and then pay the monthly rental cost. This allows someone to drive a brand new car around for a fraction of the cost of buying a car and they no longer need to worry about maintaining it, because the major costs are covered under the terms of the lease.

Some people use their old car as a deposit for the against the value of the new car, but they rarely have the same value taken off the new car as they would if they had the time to sell privately. Even when people use their car as a deposit, they usually find there is a shortfall that means taking a loan, using savings or accepting a higher monthly payment.

Security vs Flexibility

Some people feel the need to own something and that’s possibly due to the way we grew up because owning your own car was a big deal at one point, but today the need to commit to ownership is less important. Even when someone buys a car on finance, they don’t own it until the finance is paid off, so it’s a complete misconception anyway. In an ideal world, buying a car would be as cheap as personal car leasing and come with the same benefits, but that’s simply not the case today.


Karen Underwood is a personal finance blogger who is interested in all things related to saving money and investing for the future. She hopes her blogs help you make the correct financial decisions.


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