Looking for your new vehicle is often an exciting time, however with so many options out there to choose from, it can often make it confusing to know which is best for you and who to get advice from. We often get asked should I lease a new car or am I best to buy a used car and maintain ownership. We outline the pros and cons of leasing a new car versus buying a used one. When weighing up which of these choices is best for you the two main considerations you should make are:
- How often do you tend to want to change your car? Do you like changing your car every two-to-four years? Or are you happy to buy a car and drive a car until the end of its life span.
- What will you be using your vehicle for? Is the vehicle going to be used for heavy use such as off roading or carrying equipment? Or will it mainly be used for practical reasons like the school run and driving to and from work? Is there likely to be a high risk of damage to the vehicle?
Benefits of Buying a Used Car
Here are some reasons you may consider buying a used vehicle.
- The car is ready immediately. Whether you’re buying this car locally or online, generally speaking the car will be ready to be driven away that day as soon as the decision is made.
- Imperfections or damage isn’t such a worry. The car may already have some small dents or dings in the vehicle when you buy it as there have been previous owners. Also, as you own the vehicle and not a finance company, you may not be worried about small imperfections should a minor accident happen.
- Avoid taking the financial hit of depreciation. On average a new car will depreciate by 15-35% in the first year, increasing to 40-60% by the 3rd year of the cars lifespan. By buying a used car, you can avoid taking this financial hit.
Disadvantages of Buying a Used Car
Although it has its perks, there are also disadvantages of purchasing a Used Car.
- Repairs costs are your totally your responsibility. Whilst maintenance is important on new and used cars, new cars will come with warranties and do not need an MOT in the first 3 years. Older cars do have higher repair and maintenance costs, especially in premium brands. Without a warranty the owner will have responsibility to pay this out-of-pocket. This cost is often not considered when comparing the lease of a new vehicle to purchase of an old vehicle.
- Uncertainty about a car’s history and use. As the vehicle has had another or multiple previous owners’ uncertainty around servicing, the history of use or tampering with the recorded mileage (car clocking) can be a risk. The option of approved used found within’ manufacturer schemes is available, however can result in you paying over the odds.
- Cannot customise car from factory. If buying a new car, you can choose features such as the sound system, interior and exterior colour and heated rear seats. This means you can tailor the car fully to your needs. This cannot be done with a used car.
Benefits of Leasing a New Car
Here are some reasons that leasing a new car may be a good route for you:
- Lower initial expenditure and a set expenditure. The initial expense of a lease vehicle is much lower compared to buying a car. The price is then set for the term you have that vehicle with no change to what it costs you. This can make budgeting easier and remove uncertainty of outgoings.
- No concern about depreciation or resale. You are not responsible for any depreciation or loss of the market value of the car, and you will not need to be concerned about the onward sale of this vehicle. This is a particular benefit in the current climate with a shift in the market to an electric horizon.
- New Car Every Few Years. If you like to change your car every two-to-four years for something different, leasing allows you to do this without worrying about the depreciation of that asset, maintenance or you having to re-sell the vehicle.
- Worry-Free Maintenance. Most new vehicles will have a warranty that lasts three years. Therefore, on a three-year lease, most repairs will be covered. The vehicle also moves on before larger maintenance costs become a concern and the risk of an unforeseen expense is removed.
Disadvantages of Leasing a New Car
Whilst it can be beneficial it’s good to take these points into account:
- You can’t make changes or modify the car once you have it easily. On a lease you are the registered keeper of the vehicle, not the owner. Therefore, you will not be able to change anything on the vehicle that will invalidate the warranty or can’t be changed back before the vehicle is due to be returned.
- You may need to pay penalties for extra milage. The contract will be set on a specific contracted mileage. If you exceed this allowance you will have to pay fees for them. Although many finance companies will offer mileage adjustments, this is down to their discretion.
- You may get charged for wear and tear. The vehicle must be returned within the BVRLA Fair Wear and Tear guidelines. If the vehicle condition is outwith guidelines, you may be charged a penalty.
- You will always have payments. When you purchase a vehicle, you will eventually have made all the payments (if you keep the car) and will no longer need to make monthly payments. However, if you constantly lease a vehicle, you will always have payments to make.
Buying a used car can make sense if you’re planning to keep the car and run it until the end of its lifespan or if the vehicle is going to be used for heavy-use where it is likely to be damaged frequently.
However, if your goal is ‘hassle-free’ motoring with certainty around costs or you like to change the car every two-to-four years, then leasing can be a great option for you and save you money.