When does a car lease make more sense than buying with savings?
If you like to have a brand new car every few years, and like the simplicity of fixed-cost motoring, leasing could be for you.
Leasing can make driving that prestige model you’ve hankered after an affordable option, because you’ll only ever repay part of the car’s value. you’ll enjoy a low deposit, lower monthly payments and avoid the hassle of selling on a used car. Include a maintenance payment and you’ll avoid any nasty surprise bills during the course of the contract.
However, you’re paying to only use the car and will never own it, unless the contract offers you the option of making a hefty final payment. You’ll also need to return it in good condition, with the agreed mileage on the clock.
The key factor is depreciation, because this is the cost that you’ll be covering with your lease payments. cars that hold their value well are a good lease option, because the difference in their value new, and at three years old, will be smaller, so you’ll repay a lower amount. Cars that plummet in value from new are a bad choice – you’ll be repaying a much higher amount.
When is buying the sensible choice?
When you want to own a car, and especially if you have the funds available, it will be cheaper to buy the car outright.
If you have a very high or unpredictable mileage it might be safer to buy a car, because excess mileage charges can be expensive.