Personal leasing deals are growing in popularity with motorists and it is easy to see the attraction when you get the chance to swap your car every couple of years for a new model, but is it the most cost-effective form of motoring?
There is always a cost attached to leasing a car and the obvious downside is that you never actually own the vehicle at any point, but if you own a car outright you will also have to consider repairs and maintenance over time.
It is a bit of a dilemma, so here is a look at some of the key points that could you decide whether you would be better off financially owning a car rather than taking the highly popular route of signing up for a personal lease.
A fair comparison
One of the fairest ways of trying to make a direct comparison between owning a car or leasing it would be to look at the typical period that you are likely to own a car for.
The median average for owning the average family car is about six years so in order to try and make a cost comparison between leasing and ownership it needs to be an equal length of time.
As the average lease period is normally no more than three years it is quite likely that you will have taken out two lease deals covering the average period that you will hold on to a car that you have bought.
The cost of leasing, therefore, needs to be doubled up so that you can take an equitable look at what it has cost you to service and maintain a vehicle you own against the price of leasing one that may not require repairing so often in that time, but costs you monthly lease payments.
Using those parameters it is likely that buying a new car will cost you the most money when you look at all of your out-of-pocket expenses, followed by a leasing deal being more cost-effective, but trumped by buying a used car and maintaining it.
It is not a precise science of course, and you could arguably sign a free maintenance program so that you don’t have any additional servicing or maintenance costs during the leasing period, but that will be factored into the monthly payments.
How long you want to keep your car for
If you want to keep changing your car to the latest model and don’t mind paying for that flexibility and convenience then leasing is probably a good way to go, but if you are someone who is happy to get their money’s worth, car ownership is likely to prove a more cost-effective option.
If you are happy enough to do some of the more simpler maintenance tasks and repairs yourself, you can download Ford repair manuals, for example, and learn how to do things properly and save a lot of money compared to paying a garage to do it for you.
If you buy a used car outright or even buy a nearly-new vehicle on finance, once you have finished any loan repayments you are free of that monthly burden. Compare that to the continual lease payments from one deal to the next and you can see that if you decide to keep your car beyond the finance deal term, you could quickly start racking up some serious savings.
If you own your car you can enjoy unlimited mileage each year without worrying about the sort of penalty that you get charged with a lease deal when you exceed your quota.
Owning the car for an extended period of time is going to cost you in annual maintenance and repair costs but unless you are unlucky and get a vehicle that suffers a lot of problems, there is a fair chance that what you spend on repairs will be less than the amount you would be paying for leasing a car over the same amount of time.
There are clearly pros and cons attached to leasing a vehicle or owning one outright so you have to decide what you want from your motoring and what your annual budget needs to be for being on the road.
The argument is likely to fall in favor of owning a car outright in the long run and there is a convincing argument which suggests that the longer you own a car for, the more you are likely to save in comparison to leasing.