Leasing Vs Buying: When Does It Make Sense To Rent Your Car?

Choosing between renting or buying your car shapes more than how much it costs in the short-term and overall. It also dictates how much control you have during your ownership, and how long you stick with the same make and model. Discover the pros and cons of the different types of car ownership and consider which method works best for you, financially and practically.

Understanding Leasing vs Buying

When you lease a car, you’re hiring the vehicle for a set period from the dealership. The cost is usually pre-agreed based on the car’s expected depreciation and spread out across monthly payments. As the car doesn’t belong to you, there may be covered maintenance and/or usage restrictions. The vehicle can be bought, re-leased or returned once this amount has been paid.

Purchasing a car means that the vehicle belongs to you from day one.  You can pay the entire sale price upfront or arrange a car finance agreement and make monthly payments (including interest) until the full amount is settled. You are entirely responsible for the vehicle throughout.

Considering The Pros and Cons

• Financial implications

Paying for a car upfront is the cheapest option in the long-term but requires you to be able to save and spend a substantial amount of capital with no adverse effects on your finances. Cars start to depreciate as soon as you drive away from the sale so a loss is unavoidable, but ownership gives you the freedom to sell or trade in your vehicle as needed to minimise losses.

Leasing or buying a car on finance is more affordable in the short-term as you can break down the cost into manageable monthly payments and gives you access to higher-value vehicles. However, these arrangements incur interest so they are more expensive options in the long run.

• Usage restrictions

Leasing contracts usually come with mileage limits—often between 8,000 and 15,000 miles per year. If you exceed this, you’ll pay a penalty for every extra mile which can quickly add up. If you drive long distances regularly or your mileage varies unpredictably, buying is a safer bet.

Ownership also gives you the freedom to modify the car however you like, from custom interiors to performance upgrades. Lease agreements usually prohibit modifications as you have to return the car in its original condition which might feel restrictive if personalisation is a priority.

• Maintenance responsibilities

New cars under lease agreements typically come with manufacturer warranties that cover most major repairs. Some lease contracts also include servicing and breakdown cover, and emergency repairs like tyre replacement. Avoiding unpredictable maintenance charges makes budgeting more straightforward.

Leasing doesn’t remove all maintenance costs. You’re still responsible for keeping the car in good condition and returning it with excessive wear and tear can lead to hefty charges.

Car owners are responsible for organising the MOT which is a legal requirement and arranging a professional service at least once a year. Ensure you can afford to cover these expenses as well as the cost of the car if you decide to buy the vehicle outright.