Leasing a car can be a great way to drive your dream car without stretching your budget, but it’s important to understand the pros and cons to determine if it is a suitable option for you.
Pros:
- Potentially Cheaper: In some cases, the monthly payments could be lower than if you were to buy the same car.
- Lower Tax Costs: You’ll pay the flat rate Vehicle Excise Duty (VED) applicable to the CO2 rating of the car, which could be substantially lower than if you bought the car outright.
- No Residual Costs: You’re not left with a resale value to worry about, which can result in a significant saving over ownership.
- Latest Models: As you don’t have to commit to a car for a long period of time, you can drive the latest model with the latest technology and safety features.
- Options to buy: Depending on the agreement, it’s possible to purchase the car at the end of the lease, with discounts applied to the purchase price.
Cons:
- Mileage Limit: The lease often includes a set annual mileage limit and you’ll need to stay within this or you’ll pay for every extra mile.
- Repayment Schedule: You’ll have to make regular payments, although you can usually choose which suits you best like annual, semi-annual or monthly installments.
- Higher Interest Rates: Interest rates are usually higher than normal car loan rates and depending on the model and lease, could reduce the overall savings made when compared to outright purchase.
- Losses on excess damage: If you go over the allowed mileage or there is damage to the car at the end of the lease, you’ll be liable for any losses.
- Early Termination Fees: You could be charged a termination fee if you end the lease early, especially if you’re within the first few months of the lease.
Overall, there are pros and cons to leasing a car, and you’ll need to decide if it’s the right option for you based on your individual circumstances. It’s important to ensure that you read the agreement carefully before signing and always look for any hidden fees or charges that may apply.
