New car sales in Europe and the US are booming right now as the economy has began to improve and more people have a little extra cash on the hip. Furthermore, in recent years the market for leasing cars has gone crazy as thousands of people opt for a slightly different deal on their next new car. Leasing cars instead of buying them with a finance deal comes with many benefits but which is really the best option if you are looking to get yourself a new car? Here we look at the pros and cons of leasing a car versus financing one.
Opportunity for a Better Car
Because of the lower monthly payments on car leasing you have a wider variety of options available to you regarding the quality of the car that you want. Whether you are after a Mercedes or a BMW that you know that you will be unlikely to afford to purchase, even with finance, leasing gives you the chance to drive a brand new one at the fraction of the cost. Most lease companies offer 24-month lease deals and at the end of the 2 year period you will return the car and make the decision again between lease or buy.
Cheaper by the Month
More often than not, leasing a car will cost you less each month. The reasons behind this are that; you are not buying the car like when you finance, you’ll never fully own this car; also you are paying the lease company the value of depreciation on the car during your ownership of it; and with finance you are paying for full ownership of the car coupled with interest charges for taking out the finance.
When you lease a car you will sign a contract with the lease company that you take responsibility for the management and general maintenance of the car. One problem that can occur is that after your 2 year period, when you return the car, you may be subject to fees for things such as wear and tear or mileage overuse. Often these fees can really add up and when it comes to wear and tear, there are some companies who will charge a great deal for what appears to be an insignificant internal scratch on the car. If you are a driver who clocks up a lot of miles then leasing may not be for you. Almost all lease cars have a mileage cap of around 10-15,000 miles per year and going over this will cost you a specific amount for each mile that you exceed the cap.
No Way Back
Two years can be quite a long time and whilst usually people will keep cars for far longer than this period, it’s nice to have a choice and with leasing, you won’t have one. Taking yourself out of your lease deal within the two year period is either impossible or expensive and isn’t worth considering. What is worth considering before you lease or finance is what car you really want, you do not want to change your mind with this. Once you’ve decided it might be best to do some test drives so that you are sure. Also consider what might change in the next couple of years, jobs, family situation, area of residence. If things might be changing soon then it’s time to finance instead.