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For many people, a car is not just a luxury, but a necessity. Whether it's for commuting to work, ferrying the kids to school, or enjoying weekend getaways, having access to a reliable vehicle is crucial. But is it best to lease or buy a car?
With the motor industry evolving to accommodate more vehicle financing solutions than ever before, it's more important than ever for consumers to understand the pros and cons before making a commitment either way.
In this article, we'll explore the key differences between leasing and buying a car, helping you navigate this important decision with confidence. We'll discuss the factors that might influence your choice, and list the advantages and disadvantages of each. When it comes to leasing versus buying a car, we’ll help you work out which is the best option for you.
Whether you should lease or buy a car is a question we get asked a lot here at Wilsons Epsom but the decision you make really does depend on your personal circumstances, financial situation and vehicle preferences. To help you decide on which option would be best for you, we’ve outlined 10 key factors to consider :
Our handy table below lays out the key differences between leasing and buying a car so you can draw clear comparisons between the two options :
| | Leasing a Car | Buying a Car |
| Ownership | You Don’t Own the Car as Leasing Is a Long-Term Rental Agreement | You either Own the Car Outright or Pay Off a Loan to Eventually Own It |
| Monthly Payments | Can Prove Lower as You Won’t Eventually Own the Car | If Financing, the Payments Can Be Higher as You Are Paying for the Entire Value |
| Long-Term Costs | Can Be More Expensive Over Time if Continually Leasing for Years and Years | Can Be More Cost-Effective in the Long Run if You Keep It |
| Mileage Restrictions | Comes With Annual Mileage Limits and Exceeding This Costs More | No Mileage Restrictions When You Own a Car |
| Maintenance | Usually Come With an Optional Service Pack either Within the Fee or as an Added Extra | You Are Responsible for the Ongoing Maintenance and Repair Costs, Plus an Annual Mot After 3 Years |
| Modification | You Will Be Limited to Modify or Customise the Car During a Lease | Owning a Car Means You Can Make Any Changes You Want to the Vehicle |
| Depreciation | Fixed Monthly Payments Mean You Won’t Have to Worry About Depreciation | You Absorb the Depreciation Which Affects the Resale Value |
| Flexibility | It’s Easy to Switch and Upgrade to a New Car Every Few Years | Changing Car Means You Have to Sell the Vehicle You Already Own First |
| Insurance | Requires More Comprehensive Car Insurance | You Can Opt for a More Basic Level of Insurance Cover |
Car leasing offers motorists a way to drive a new vehicle without the commitment of ownership - it is a form of long-term rental. Typically, you choose a car from a leasing company or dealership and agree to a contract lasting between 24 to 48 months. After paying an initial deposit (usually the equivalent of 3-9 months of payments) you make fixed monthly payments for the duration of the lease.
The agreement includes an annual mileage limit (often ranging from 6,000 to 30,000 miles) with additional charges applying if you exceed this. Most leases include road tax, and some offer maintenance packages too. However, you are responsible for insuring the vehicle fully comp.
At the end of the lease term, you return the car to the leasing company, potentially paying fees for excess mileage or damage beyond normal wear and tear. Leasing allows you to drive a new car every few years without worrying about depreciation or resale value, but it does require a good credit score and doesn't result in vehicle ownership, like with a finance agreement.
Financing a car is quickly becoming the most preferred route to vehicle ownership in the UK, but it’s not the only choice. Below, we share the most popular options for buying a car.
This means you pay the full amount upfront using savings or personal funds. There won’t be any interest charges and you’ll have immediate ownership of the vehicle.
This means you’ll likely borrow the money from your bank in order to buy the car. You will need to make fixed monthly payments over an agreed term plus interest charges, but you will own the vehicle straight away.
This means you apply for finance through a dealership or third-party lender to fund the vehicle upfront. You will then need to make monthly repayments during a fixed term, plus interest. The most popular forms of finance include Personal Contract Purchase (PCP), Hire Purchase (HP), and Lease Purchase (LP). You won’t own the car until all payments have been made.
Depending on the cost of the car, some buyers choose to put it on a credit card but always be cautious with this option as it can incur high interest rates. However, your purchase will be protected should something go wrong.
Particularly useful if you have a history of poor credit or a bad credit score, someone else (usually a close family member or friend) will apply for a loan on your behalf and guarantee the loan repayments. This option can come with higher interest rates and it is a risk for the guarantor if you miss a payment.
Some employers offer car purchase schemes as part of benefits packages which is well worth exploring as an option. Employer-offered schemes like this mean the monthly car payments are deducted from your pre-tax salary.
Determining whether it's cheaper to buy or lease a car isn't as straightforward as it seems; it depends entirely on various factors and individual circumstances. In the short term, leasing often appears cheaper due to lower monthly payments and minimal upfront costs. However, when considering long-term expenses, buying a car can be more economical, especially if you plan to keep the vehicle for many years.
With buying, although initial costs and monthly payments may be higher (if you choose to finance the car), you eventually own an asset that you can sell or part-exchange at any time. While offering lower monthly outlays, leasing means continuous payments without building any equity or eventually owning the vehicle. The total cost also depends on factors like the car's depreciation rate, your credit score, mileage needs, and how well you maintain the vehicle.
For those who prefer driving a new car every few years, don't mind ongoing payments, and aren’t fussed about ownership, then leasing might be the more cost-effective and preferable choice. However, for those looking to make an investment and are happy to keep a car for an extended period, buying could be the better choice.
Like anything, leasing a car has its own advantages and disadvantages. To give you a better idea if leasing a car is for you, we’ve listed the pros and cons of leasing :
| Leasing Pros : | Leasing Cons : |
| Lower Monthly Payments | No Ownership or Equity Buildup in the Vehicle |
| Can Drive a New Car Every Few Years | Mileage Restrictions With Penalties for Exceeding Limits |
| Includes Road Tax Costs | Potential Charges for Excessive Wear and Tear |
| Avoids Depreciation Issues | Continuous Monthly Payments |
| Maintenance Packages Can Be Included | Early Termination Fees if You Need to End the Lease Prematurely |
| No MOT Requirements for up to 3 Years | Limited Ability to Modify or Customise the Vehicle |
| Potential Tax Benefits for Business Use | May Require Excellent Credit for the Best Deals |
| Predictable Monthly Expenses | Higher Insurance Costs Due to Comprehensive Coverage |
| Easy to Upgrade to Newer Models | The Car May Be Repossessed if Payments Are Missed |
Just like with leasing, buying a car also has its own advantages and disadvantages. To give you a better idea if buying a car is for you, we’ve listed the pros and cons of purchasing :
| Buying Pros : | Buying Cons : |
| Full Ownership of the Vehicle | Higher Upfront Cost |
| No Monthly Payments After Purchase (Unless You Finance It) | Responsible for All Maintenance and Repair Costs |
| Freedom to Sell or Trade-in at Any Time | Subject to Depreciation |
| No Mileage Restrictions | Ties up a Large Amount of Money |
| Ability to Modify or Customise the Car as Desired | You May Be Driving an Older Car Longer |
| No Penalties for Wear and Tear | Responsible for Selling or Disposing of the Car |
| More Flexible Insurance Options | No Option to Easily Upgrade to a Newer Model |
| Builds Equity in an Asset | Potential for Unexpected Repair Costs as the Car Ages |
| No Contractual Obligations (Unless It Is Financed) | You Need to Pay Road Tax |
The decision between leasing and buying a car is ultimately down to you and your individual circumstances. Both options have their merits and drawbacks, so we hope this article on the topic has helped you make up your mind, or at least given you a better idea of the difference between the two.
To see our summary of everything we’ve discussed in this car leasing vs buying guide, continue reading - we’ve also addressed your most frequently asked questions about leasing and buying a car, in the next section below.
Leasing offers the advantage of lower monthly payments, the ability to drive a new car every few years, and freedom from depreciation worries. It's a particularly attractive option for those who enjoy driving the latest models and who don't mind not owning a vehicle.
Buying, on the other hand, provides the benefits of full ownership, unlimited mileage, and potential long-term cost savings. It's often the preferred choice for those who plan to keep their car for many years, want the freedom to modify their vehicle or see their car as a long-term investment.
Make sure you consider your driving habits, budget, and long-term goals carefully. Remember to factor in aspects such as your annual mileage, how long you typically want to keep a car, and your tolerance for maintenance responsibilities. While leasing might offer lower monthly costs and means you drive the latest models, buying can be more economical in the long run if you keep the car for an extended period.
Ultimately, there's no one-size-fits-all answer. The best choice is the one that aligns with your lifestyle, financial goals, and personal preferences. Whether you choose to lease or buy, make sure to do your research, compare options, and read all agreements carefully before making your final decision.
Whether buying or leasing a car is better depends on your individual circumstances and financial situation. If you plan to keep the car for a long time (5+ years), have high annual mileage, want to build equity in an asset, or want to make modifications, then buying may be a better choice. But, if you enjoy driving a new car every few years, can’t access the cash to make a large upfront investment, and don’t want to organise road tax or maintenance, then leasing may be a better option.
The biggest advantage of leasing a car is typically the lower monthly payments compared to buying. This allows you to drive a newer, often more expensive vehicle than you might be able to afford if purchasing outright or financing a purchase. You're only ever paying for the depreciation of the car during the lease term, not the entire value of the vehicle.
Yes, you can end a car lease early, but it often comes with financial implications. Before you decide to terminate the lease agreement early, carefully review your contract for specific terms, calculate all the potential costs involved, discuss the options with your leasing company, and consider the timing; exit fees may be lower closer to the end of your lease term.
The best way to buy a car depends on your current circumstances, but firstly you need to determine your budget - both the initial purchase price and ongoing monthly costs to run the vehicle. Check your credit score to see if you’re eligible for car finance and what those options are. Make sure you get pre-approved for a loan before agreeing to it and shop around to find the best deals and interest rates.
Insurance is typically not included in a standard car lease in the UK. Instead, it is the responsibility of the person leasing the car to ensure they have fully comprehensive insurance in place throughout the duration of the contract.
The cost of leasing a car in the UK varies widely depending on several factors, such as car make and model, lease duration, annual mileage allowance, initial payment, your credit score, and current market conditions. As a general guideline, you can expect to pay around £150-£250 per month for a budget entry-level car, anywhere from £250-£400 per month for a mid-range model, and at least £400-£800+ per month for a premium car.
Yes, you can lease a second-hand car in the UK and this option is becoming increasingly popular. Often referred to as used car leasing or second-hand car leasing, cars up to 4-5 years old are typically available which offer lower monthly payments compared to leasing a brand new car.
Personal Contract Hire (PCH) is a popular form of car leasing. Also referred to as personal car leasing, It is a long-term rental agreement where you pay a fixed monthly amount to use a car for an agreed period of time, typically 2-4 years. As with any kind of lease agreement, you never own the car, pay fixed monthly payments, pre-agree a mileage limit, and make an initial rental payment to secure the deal.
As a leading car dealership in the South of England, at Wilsons Epsom, we offer drivers a range of options for both leasing and buying vehicles. Conveniently located in Surrey with easy access from London, Sussex, and Kent, we provide a diverse selection of new and used cars from world-renowned manufacturers.
For those interested in leasing, we offer competitive Personal Contract Hire (PCH) plans, allowing customers to drive new vehicles with lower monthly payments. Buyers can choose from outright purchase options or various financing solutions, including Personal Contract Purchase (PCP) and Hire Purchase (HP) agreements.
Our helpful and experienced staff can guide you through the process, showcasing the most suitable choice for your needs and budget. We also provide aftersales support, including servicing and maintenance, ensuring a comprehensive car ownership or leasing experience for years to come.
Whether you're looking to lease your next car or buy one upfront, at Wilsons Epsom we aim to provide a straightforward and customer-focused approach to driving your next vehicle.