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Car leasing versus car finance

When you buy a car, what’s the best option? Car leasing or car finance? Both allow you to spread the cost of your purchase over a set amount of time. Both have their pros and cons. Which is right for you?

Car Finance

The biggest pro of car finance is that you own the car at the end of your agreement. Meaning the amount of money you invest is in something you own, rather than something you rent. In a finance deal, you spread the entire cost of the car over the monthly payments. This means they are slightly higher than in a leasing deal.

Another bonus is that you have no limitations on the usage of your car. In a leasing deal, there are mileage limits and condition requirements, as the dealer will expect to have the car returned. If you own the car, you don’t have to worry about this.

Car finance deals are also more widely available to those with a less strong credit rating.

Car Leasing

A leasing deal is almost like a rental agreement. This means you pay less each month than on a finance deal. The cost of a leasing agreement is based on the depreciation of a car’s value from the start until the end of the term. In some leasing agreements, you can return the car at the end and start leasing a new one, meaning you can change your car for a more recent, better model.

The downside of leasing deals is that they come with mileage limits and condition requirements, meaning you have to be more careful than you would if you owned a vehicle. And if you break these limits, you end up being charged extra. You also invest a lot of money into something you don’t own, which some consumers don’t like.

Which is right for me?

The right type of car purchasing is dependent on what you want to do with your vehicle at the end of your agreement. Do you want to own something that you can sell and make money from? Or do you want to keep swapping between models every few years? You should also look at how you will use the car to see if the mileage limits and condition requirements are going to affect you or not.

Car Buying Tips  30/11/2018 08:46:53

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