Leasing a car or buy?

If you’re in the market for a new car, one of the key decisions is whether to buy or lease the vehicle. There are important differences between leasing and buying a car, and it’s worth having a good idea of how each option works to make the right choice for you.

Leasing a car gives you the flexibility to use the vehicle without owning it. There are several options for leasing a car, and the regular payments you make may be similar to a car loan. The big difference comes at the end of the lease – you could face a lump sum payment if you want to own the car, or you can hand in the old car and “rollover” the lease and continue leasing a new car. Read on to decide if leasing a car is right for you.

Leasing a car - how does it work?

  • Leasing a car lets you use the vehicle, not own it

    When you lease a car you're paying for the use of the vehicle over a set term. Depending on the type of lease, you may have the option of buying the car once the lease expires by making a lump sum payment known as a 'residual'.

  • Two main types of car leases

    Broadly speaking there are two main types of lease - a 'finance' lease and an 'operating' lease. An operating lease is like a rental agreement - once the lease term ends you hand over the vehicle and no longer make any payments.

  • A variety of finance leases

    Finance leases are a little more complicated. You pay a set monthly lease payment, and at the end of the lease term you can choose to pay the residual value of the car, or swap the lease over to a new vehicle and continue making monthly payments. Finance leases are popular among businesses because it's a way of providing employees with cars without making a substantial investment in vehicles, which depreciate rapidly.

TBA Broker Stephen 400X400

We can help you to explore the car financing options best suited to your needs.

Your local Mortgage Choice expert

or