Is leasing right for me?
Of course, only you can decide this - you know your present circumstances and how your lifestyle and income are likely to change over the next couple of years. There are definite advantages and disadvantages to leasing and it's important that you can live with the downsides; if not, then leasing may not be ideal for you.
The advantages
• leasing is often the easiest and cheapest way to get behind the wheel of your dream model;
• you'll be covered by a manufacturer's warranty for the entire term;
• your road tax and breakdown cover will be included, as well as servicing in many cases;
• you don't need to worry about depreciation - you just hand the car back to the lease company when your term's up; and
• if you have your own business and you're VAT-registered, you can deduct the cost from your profit and claim 50 per cent of the VAT back.
The disadvantages
• you don't ever own the car - you're just renting it;
• your monthly payments might be small, but your resale value at the end of the term will be even smaller (zero) because you don't own the car;
• you need to watch your mileage because you could pay huge surcharges if you go over it;
• you could also end up paying charges if the car is damaged;
• you need to remember VAT - it's not always included in your quote;
• if you write off the car and the insurer's valuation is lower than the lease company's, guess who makes up the difference...; and
• if you want a particular colour or another spec, you will have to pay extra for it.
Is it cheaper than buying?
It depends what sort of car you're after. If you're looking at some brand spanking new Range Rover lease deals, then yes, it's cheaper than buying. You could pay around £12,000-£14,000 over the course of a two-year lease here, as opposed to £30,000-£40,000 if you were to buy outright. If you can't afford that, but really fancy the Range Rover, then it's a no-brainer.
However, cheaper cars may not work out so well and then you don't even get to sell them yourself! Do the maths before you start. A cheaper little hatchback can still cost £6,000 or so for two years, so you might be better off buying one and then selling it later.
Realistically, though, smaller cars aren't "made" for leasing. If you look at cars that tend to hold their value, you'll find the lease deals are cheaper because the resale value to the company will remain quite high - they won't lose out much over the two years. However, you may still find a two-year-old model too expensive because it hasn't depreciated a lot - you can see where leasing really comes into its own.
Do your homework
You need to think about everything you'll pay over the contract term and look at a few options. Will you have to pay for your own servicing? Many lease companies include the servicing and maintenance, but remember that a car often doesn't need a service in its first year, so you may not be saving as much as you think.
Promoted by Albert Adam - 21 Aug 2017