Pros and cons of leasing a car

There are so many methods of buying a car that it’s not always easy to work out which one is best for you. Car leasing is a popular way to get into a brand-new car but it competes with several other methods including PCP finance or a bank loan, and while there are advantages to each type, there are also disadvantages as well.

If you’ve seen a tempting lease deal on a new car but aren’t sure what leasing involves, you should read our explainer here to find out the fine details. However, if you know what leasing involves but aren’t sure if it’s right for you, read on below to find out the pros and cons of car leasing in the UK.

Pros of leasing a car

Leasing is often the best way to get a low monthly payment for a new car, and potentially a low upfront cost as well, so the main benefit of leasing is usually its affordability. It means you may be able to afford to get into a new car when you’ve only had used ones in the past, or perhaps you can drive a nicer car than you would otherwise be able to.

You also don’t have to worry about paying anything other than the monthly cost you agree on at the start of the leasing deal, so budgeting for a set monthly cost is easy. Payments include ‘road tax’ (VED) and you don’t have to consider depreciation, as you would with an outright purchase or buying with a bank loan. There’s no large payment at the end of the agreement either; you just hand the car back and stop paying.

You also might get maintenance included in the price, depending on the leasing deal, which takes care of that added cost as well. However, it’s more of a case of simplifying things rather than being cheaper, because the maintenance cost is usually just added to the regular monthly bill. And if you do have a deal like that, then the only other costs to consider will be fuel and car insurance.

Leasing a car can be pretty flexible too, because you can often adjust variables such as annual mileage or the length of the agreement to suit you. You can work out how far you’ll drive each year and get a cheaper price by making the mileage limit just above that. You may be charged a fee for going over the limit, but you can always plan ahead to avoid that.

Cons of leasing a car

The main disadvantage of leasing is that you are only paying to be able to drive the car, not to own it. It means the money you pay isn’t building equity in the car and you have to hand it back at the end of the agreement with nothing to show for it. This contrasts with other finance methods where you pay monthly to eventually own the vehicle. 

This means that while leasing might look cheaper initially, you need to work out all the costs carefully before you commit. It might be a lot cheaper per month to lease a car, but if you spent a bit more to actually own the car, then you could sell it later to recoup some of that back, and the total cost might be less. That’s not always the case, though, so it requires careful consideration if you want to save money in the long run.

As with all finance agreements, leasing requires that you are sure you can always make the payments. If you can’t pay, then the car can be taken away and your credit rating will take a hit, so you need to make sure you will always have the money each month. You also need to keep under the mileage limit to avoid fees, and keep the car in good condition. If there’s damage when you give the car back, you can be fined as well.

Another con is that you cannot modify or even sell your car, as you could if you owned it. Given that leasing is effectively a long-term car rental, you don’t ever have control of it, beyond when to have maintenance carried out. Any money you spend on consumables like tyres or brakes is also lost once you hand the car back.

Is leasing a car right for me?

Although the eye-catching monthly costs make it look like leasing is good for saving money, that’s not always the case. It’s a finance method mainly for people who want to keep things simple and pay for peace of mind rather than get good value for money.

This is because while you might pay less per month than for an equivalent PCP finance deal or bank loan, you own nothing at the end of the agreement. All the money you spend is gone and you have to hand back the car at the end; you can’t sell up or use it to help pay for your next car.

However, you might be able to drive a nicer car than you could otherwise afford with a leasing deal, and if you don’t mind losing a bit of money in the long run, it could be well worth it. It’s really up to you to work out the overall cost and whether it’s worth it to you to get the car you want. Sometimes the best decision isn’t always the cheapest, but only you can decide that. As long as you have all the information, you should be able to come to a conclusion.

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