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The process involved with getting a new car can be stressful, as it is one of the biggest purchases you can make. This situation is then made worse when you need to decide between buying or leasing the car. Buying and leasing both have their advantages and disadvantages, so both options need to be considered carefully before deciding on which way to go.

One of such consideration is the potential depreciation of the car’s value. The vehicle starts to depreciate as soon as it is sold and drivenoff the parking lot, and the longer you own and drive the car, the less it is worth. The aim of this guide is to provide you with unbiased tips and suggestions on both options available to drivers that are in the process of decided whether to buy or lease a car.

Leasing

There are different types of car leasing, but the two main ones are Personal Contract Hire (PCH) and Business Contract Hire (BCH). Like the name suggests, the PCH is when you lease a vehicle for your personal use and BCH is when you lease it through the business account. Both types of leasing require you to put down an agreed-upon payment as deposit, as well as continuous monthly payments for the duration of the lease period. After your leasing period expires, and depending on the type of contract you signed, you have three options available to you: you could either just return the car to the leasing company and settle your account; or you could make additional payments and own the car outright; or you could renew/upgrade your car. Listed below are some of the advantages and disadvantages of leasing a car:

Advantages

  • Little down payments
  • Lower monthly payments
  • Drive a luxury car for less
  • Less sales tax
  • No trade-in hassle
  • New car as often as you’d like

Disadvantages

  • You don’t own the car
  • Limited mileage
  • Leasing is more expensive in the long run
  • Wear-and-tear costs
  • Terminating contract early can incur additional costs
  • Leasing contracts can be long and confusing

Buying

There are a variety of ways to buy a car. You can either buy it out-right, if you can afford it, or get it on finance through the bank or car dealership. Although the process of actually buying the car might be confusing, it is always good to know that, at the end of it all, you are going to own a car. However, owning the car outright also means that you have to take responsibility when any problems arise. Before you buy the car, you need to make sure that everything is intact and in working order, from something as complicated as the V5C form, to something as basic as the car tyre pressure.

There are different circumstances that determine if buying is the right move to make. You should be able to estimate how long you plan on keeping the car for, and how often you intend to use it. If you are only going to be using it to get from A to B, then you might consider leasing. But if you want a family car that is used by everyone, then you should consider buying. Listed below are some advantages and disadvantages of buying a car:

Advantages

  • The car is yours, so you can modify and personalise as you like
  • In the long run buying a car is more economical
  • You are not limited by mileage; you can drive as far and as often as you’d like
  • You can sell or scrap the car when you feel like it

Disadvantages

  • The down payment required when buying a car is much higher than what is needed when leasing
  • You have to pay higher monthly payments
  • Most cars come with a warranty for any issues that might arise but, once that warranty expires, you have to bare the costs of repairs
  • When the time comes, trying to sell the car can get stressful
  • You tie up your cash in the car, leaving less potential to invest in something else
  • As soon as you drive the car off the forecourt, it starts to go down in price – and the longer you own it, the less it is worth
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