Buying or leasing: which is better?

A discussion in the office recently surfaced about what actually works out better between buying a car outright and suffering the depreciation, or leasing a car and essentially paying for the depreciation to end up near enough at the same point as if you had bought the car in the first place.

So in as little words as possible I am going to summarise what actually works out better for potential customers.

Paying cash on a car has always been the cheapest way to buy a vehicle in the long term. Like most purchases, when you pay up front there are no monthly repayments that mean your monthly salary doesn’t take any extra hits.

The problem with paying cash is that you have to pay the full cost upfront. So wave goodbye to a portion of your savings and your hair, as you will be losing both as the car depreciates. As my granddad told me once, investing in an appreciating asset (i.e. a home) is a wiser choice than investing in a car.

So while buying outright is a simple and cheaper long-term way of buying a new car, it really comes down to if you can afford it.

Another option is leasing.

Leasing offers you monthly payments that are relatively low, with perks such as road tax and servicing included. By leasing, your monthly payments cover the cost of the vehicle’s fall in value while you rent it, so essentially the value of the car would be around the same had you bought the car up front with cash.

As with buying, there is also a downside to leasing, as you don’t own the car at any point during the lease. You will have to cover the cost a deposit, though, which varies between suppliers. Perhaps the best deals come from CVSL; they have some very tempting offers on their website.

So leasing is a slightly more convenient way to drive a new car, especially if you find a good deal. All in all it comes down the car you choose. Models that depreciate the fastest will cost more per month, but take a Nissan Qashqai – one of the top 10 most popular cars in the UK, which could be yours for around £190-£220 a month, with a deposit under £2k.

It’s an option well worth considering.

By James Fothergill

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