The argument of car leasing vs car financing is a lot like the debate surrounding buying vs renting a house. Each option provides its own pros and cons, with the better option typically relying on your unique situation. But what are these benefits and negatives, and how should they shape your purchasing decision? Read on to learn more about the leasing vs buying a car debate and discover which option provides the best outcomes for you.
If you are looking to purchase a car but don’t know if you have the finances, the vehicle finance brokers at Fido Finance are here to help. Find out more about our services on the How it Works Page and try out the obligation free pre-approval process today.
Lease vs Finance
Before looking at the pros and cons of car leasing vs car financing, it is important to understand what each option is:
Leasing a car means you are essentially renting the vehicle. Rather than owning the car outright, you are paying to drive it for a certain amount of time. When you enter into a car leasing agreement both parties decide how long the lease will run for, with the average lease being 24 or 36 months. Once the agreed time has been reached, you may be given the option to extend, return the car, or buy it.
Financing means you intend to buy the car and will do so with the help of a car loan. When purchasing a car with a loan you must make regular payments to pay back the loan, with the car becoming officially yours once the loan has been settled.
Car Leasing: The Pros & Cons
When comparing car leasing vs car financing, leasing may present itself as the safer alternative, as it allows you to use a car without having to commit to purchasing the vehicle. This is handy if you are only looking to use the car for a certain period of time, or if you are unsure if the chosen car is the right fit for you. Some companies will offer their employees the option to salary sacrifice their car lease payments, resulting in a tax benefit. Additionally, if the car is being used for work purposes, you may be eligible for further tax deductions.
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While it is always nice to save money, having no ownership of your car means how much and how far you can drive may be restricted. Additionally, at the end of the lease term you have no ownership over the car, meaning the payments you have been making are not contributing to any long-term gain. Â The overall lack of control in general can make leasing a car a risky proposition.
Car Financing: The Pros & Cons
The biggest ace in the leave vs finance debate is that when you buy a car, it is yours to keep. No restrictions on your vehicle means you have total control of its usage. You are also free to make any modifications to the car as you see fit. While upfront payments may be more expensive than leasing, it is cheaper overall to purchase a car than to lease it over time. If you are buying the car to assist with your business, you may be eligible for tax deductions to lower the cost.
When comparing leasing vs buying a car, it is important to consider how much the purchase of a car is going to cost you upfront. While financing a car will save you more money overall, it typically requires bigger payments until the loan is paid back. Once you have financed a car it becomes your responsibility, meaning you must cover all maintenance and insurance costs.
Which Option is Better?
While lease vs finance ultimately comes down to your personal circumstances, financing tends to be a popular choice. Whilst upfront costs may vary, the security of owning your own vehicle and the money saved overall makes it the clear winner. Once you are behind the wheel, the car is in your name, and you are free to modify or drive it however you wish. If you are not satisfied with your vehicle, or wish to upgrade, you are free to sell the car even if you still owe debt for the purchase. This provides a level of freedom that car leasing can’t provide.
Owning your vehicle also allows you to build equity, which means you will be able to make some of your money spent back if you choose to sell in the future. Being the owner of the vehicle means you can choose the right insurance that suits your lifestyle and finances, rather than being forced to pay for one included in your lease program that doesn’t work for you. The biggest deciding factor in comparing car leasing vs car financing is the security that car financing provides, as it ensures you still own the vehicle even if your circumstances change.
Why Choose Fido Finance?
At Fido Finance we work hard to secure the best possible loan with market leading rates. Once you have given the thumbs up and signed a contract, we’ll have you on the road within 24 hours. While you can go to a lender directly, you are only being presented with one side of the market, limiting your options to compare rates from other lenders to find the best option for you.
Fido Finance works on your behalf to present your desired purchase to our network of reputable lenders. If you’re still considering the leasing vs buying a car debate, speak to the expert brokers at Fido Finance to ensure you receive a car loan that gets you behind the wheel without having to sacrifice your income.
