Getting a car is an exciting prospect but you may not be sure whether to lease a car or buy it. The explanations below on what the differences are between a car lease and buying should assist you in swaying either to the vehicle leasing side or purchase side depending on your preferences.
When you take out a bank loan to buy a car and organise monthly repayments, those payments will include interest you need to pay on your loan. As your monthly payments progress, the amount you owe the bank becomes progressively smaller, and in turn the interest you pay becomes less because the amount you're paying interest on is reducing. For instance you may take out a £10,000 loan to purchase the car and after several months you have paid back £3,000 plus the interest. Now you're only paying interest on £7,000 instead of £10,000.
When it comes to lease cars however, the payments you make are for the use of the car as opposed to buying the car. This use includes the car's depreciation cost (i.e. the value it will lose whilst in your use), mileage that goes over your lease agreement mileage, as well as excessive wear and tear that occurs during your use of the car. You will also pay interest charges during car leasing. The vehicle leasing company that you lease a car from has actually bought the car before leasing it out to you, so you are paying interest on the purchase price of the car (for example a £10,000 purchase price). Remember though that with car leasing you are paying to use the car (as opposed to car purchasing) so the £10,000 that you are paying interest on never decreases in size as it would if you'd purchased the vehicle, and therefore the interest you pay will not decrease as it would with purchase repayments.
One of the main benefits of a car lease is that once your lease agreement is finished, you return the vehicle to the car leasing company and it is their responsibility to sell it. Although monthly lease payments are likely to be higher overall for your lease's duration than if you were to buy a car and pay off a purchase loan, you'll be able to get a new car every few years when your lease agreements expire. The maintenance costs on a leased car are likely going to be quite low because when you receive it the car is new and the lease period will only be a few years.
If you buy a car and want to sell it a few years down the line, the depreciation cost will mean you're almost always going to make a loss in comparison to what you paid for it when new. It will also in all likelihood cost more to maintain your car the older it gets. One of the benefits of a purchased car over a lease car however is that you can modify it since you own it but you are not allowed to make modifications on a lease car.
Author Resource:-
Understand the contrasts between buying a car and car and leasing before making a choice. Visit Leasing Options for brilliant deals on your lease cars
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