In years gone by, car leasing has been an option mainly associated with company cars allowing employees to drive the newest cars without having to pay the full price. In 2021 and 2022, however, more and more people are leasing personally and it is easy to see why when you look at the benefits that it can bring and the current situation. Current statistics show that around 1.6 million people lease cars in the UK and it has been on the rise for a few years with 14% growth in 2019.
What is Leasing?
So, what exactly is leasing? Technically known as personal contract hire, leasing a car allows you access without having to pay for full ownership of the car. Monthly payments are made over a pre-agreed term after which the motorist can return the vehicle and take out another lease on a newer car.
What Are the Pros?
Leasing allows motorists access to more expensive and newer cars as you do not have to pay the full sum. The monthly payment is usually lower than a finance deal as you will not own the car. Not only this, but you can drive a new car every few years without the need to worry about depreciation or the hassle of selling the vehicle. This means that you can access the best and latest cars, which are often cheaper to run, come with the best tech and are safer than older cars.
What Are the Cons?
Leasing can work well for motorists that are not fussed about ownership, but it does have a few drawbacks to consider. Due to the fact that you do not own the car, this means that there are often limits as to how it can be used including no customisations and annual mileage limits. Additionally, costs may not include maintenance although some do, so you need to keep this in mind.
Leasing Vs Buying
When you need a new car, it is important to take the time to determine whether leasing or buying is best for you. From a financial standpoint, leasing often makes more sense because there are no interest payments to make and it can be an affordable way to drive a brand new car. Additionally, not having to worry about depreciation is a major benefit with cars often losing over 50% of their value after 3 years.