My current car has just had its 3rd birthday and as a gift from me to it, I’ve decided to upgrade! Now, my trusty motor has been a nice car to own and drive but I like to upgrade my car every 3 years or so.
This time, however, I have looked at leasing my next car and have decided to share my pros and cons list in case it can help others.
Pros of leasing a car
Lower upfront costs
Normally when you lease a car you pay an initial amount at the beginning of the contract. This can be anything from £0 to several £ks! But, compared to a new car you own it is still much less.
Fixed monthly payments
This is great for most people and allows you to budget easier. You know exactly how much your car is going to cost you each month.
Covered by a warranty
All cars sold in the UK are covered by a minimum of 3 years manufacturers warranty for retail customers. Some brands such as Kia, Toyota and Hyundai to name just three offer more than this. Kia even offer a 7 year / 100,000 mile warranty!
Having this warranty can make you sleep easier at night. My current car has had 4 warranty repairs in the last 3 years and it has cost me nothing to have these done. The invoice amounts would have been around £800 for all repairs.
Imagine having a tight month financially and the above happening on an older car. Trying to find the repair costs just adds stress to life.
No MOTs!
Most lease deals only last 3 years. So, most of the time you can get away with handing the car back just before the first MOT is due.
If your car is a diesel this is even more of the plus point thanks to the strict criteria the DVSA introduced back at the start of 2018!
Just add fuel – Everything included!
This is an option offered by Peugeot but other makes offer a similar package too. It provides you with a brand new car plus the tax and insurance are included as well. You also get servicing and any repairs included. So, as the name suggests, you just add fuel and drive! Some of these packages even cover the cost of new tyres/repairs if you get a puncture!
If you really want to know how much your car is going to cost, this might be worth taking a closer look at.
Business users
As I’m a director of a UK Ltd company my accountant has always advised me that its easier to claim back tax if your company leases a car or van compared to buying one.
So, if you run a company or are self employed, leasing might be easier and a more tax efficient option compared to owning.
Cons of leasing a car
Mileage
All car leases have a maximum amount of miles you can drive each year. Each deal will differ but some I’ve seen are as low as 4000 miles a year. That might sound a lot but trust me 4k soon racks up!
If you go over your allocated mileage they can charge you a penalty per mile. One deal I saw charged 10p for each mile over.
This could effect me as I now live in a rural area and as such we’re further away from places I need to travel to. This means I now do more miles compared to when I lived in a town / city location.
Ending the agreement early
This is one of the main concerns for me when it comes to leasing. Imagine you sign a 3 year agreement and lose your driving licence a year in to this. You will still have to continue paying the lease for the remaining 2 years.
Another scenario to consider. Say you have a baby mid lease and need a bigger car. You will either be hit with fees to upgrade or simply told you have to wait until the end of the agreement.
So, it would seem that the only occasion they will end the lease deal early is if you die!
Additional fees at the end
I’m talking from experience now. A mate of mine has just handed back his leased car of 4 years. When the inspector went around the car he noticed some car park dings and a small scuff his wife had made on the front bumper.
As you would expect they charged him the repair costs plus another fee for time and administration!
They also stung him for 2 new tyres even though they still had 3mm left on them!
Left with nothing at the end
Now, most cars lose money as they get older. But when you hand your car back at the end of the lease you are left with nothing. You will also need to pay another initial payment if you plan to lease again.
What am I going to do?
I’ve decided to buy my next car again rather than lease. This is simply a personal decision and one that I feel will work better for me and my needs.
If I was using my car for business use I may have considered going down the leasing route much more due to the tax benefits available.
I now just need to choose what I am going to buy next!
To finish
I hope this pros and cons list has helped you decide if leasing your next car is the right option for you and your family?
I researched these points for myself and as I have this site I thought I might as well share it too for anyone who would like a read!
Happy and safe driving!
Cheers,
Lee 🙂