Leasing is one of many choices when it comes to funding options for your new car, and has become popular amongst private purchasers, as well as business and fleet owners. There are various questions to ask and ponder when it comes to deciding whether to: lease your next car as opposed to using HP (Hire Purchase), buying using cash or savings, taking out a loan or using a funding option, such as PCP (Personal Contract Plan).
Here is a quick run down of the main considerations…
Do I need flexibility to fit my budget? – Within reason, you can tailor a lease agreement to match your budget. If you’d like to stick to a certain monthly payment and not exceed it, then within reason you can likely adjust other aspects of the agreement, such as mileage and initial deposit, to arrive at a preferred monthly figure.
Does car age matter to me? – If you prefer to run a new car and change it regularly, then leasing is ideal as you can change cars as frequently as every three or even two years. The rate of new car model launches means changing cars regularly keeps you at the forefront of new car technology.
Can I avoid any hassle? – Of course everyone wants to get a new car with as little hassle as possible, but more specifically would you like to avoid the time and worry of selling or part exchanging cars when it’s time to change. Leasing removes this concern as you simply return the car and move straight into another if you wish.
Do I want to know where I am financially? – Leasing helps ensure your monthly costs are known throughout the agreement. Variables such as maintenance and some replacement costs are removed with lease agreements, including a maintenance option.
Do I want some flexibility in whether I own the car or not? – If so, check out the various leasing options, including lease purchase. While leasing is a method of running a car with no ownership implications, there is flexibility if you’d like to own it at the end of the agreement.
Do I know my motoring requirements for the next two (three or four) years? – It’s not easy to prematurely terminate a lease if you realise you’ve either made a mistake in your car choice or your usage requirements change.
If you’re not sure if your requirements will stay the same for long, then a shorter leasing term would be preferable along with choosing a higher mileage limit than you’re likely to cover initially. This builds in some leeway although it’s worth pointing out that some leasing companies will allow you to adjust your mileage limit and your monthly payment during the course of the agreement.
It’s always an upheaval to change a car soon after you’ve acquired it whatever funding method you use. Even buying outright means you’ll almost certainly suffer significant depreciation; the biggest car cost after fuel purchase according to the AA.
Can I maintain the car in good condition? – If you can’t, then be aware you’ll be charged at the end of the agreement for damage beyond fair wear and tear.
Am I comfortable with not owning the car? – More people are moving to funding high value items like cars with leases even if they have the means to buy outright. It’s a great way of keeping cash in savings rather than being spent in one large sum.
That said, some do feel find it a bit strange not owning their car. It’s worth pointing out though that on a HP agreement you don’t own the vehicle either, until the final payment has been made.