Which is best? Getting a car loan or leasing a car?
We cannot actually answer this question because so much depends on your particular circumstances. However, we can point out some pros and cons of each option so you can make an informed decision.
A car loan used to pay for a car means you own the car outright. It is one of several forms of finance you can use to buy a new or used car.
Pros of a car loan:
- You own the car outright – Once you pay for the car using the loan and as long as you keep up your payments, the car is yours to do with as you wish.
- No mileage restrictions – Some car leases come with annual mileage limits. These are flexible but once set, they mean paying cents on the mile if you exceed that limitation.
- Reduced initial outlay – Depending on the size of your down payment, a car loan can involve a much lower initial payment than a lease.
- Widely accessible – With bad credit car loans and subprime lending, more lenders are willing to work with a wider range of borrowers than many leasing companies.
- No end of lease inspection – If you have ever leased a car, you will know that nervous time when you hand the car back to be inspected. You don’t get that with a car loan.
Cons of a car loan:
- Doesn’t include maintenance – Not all car leases come with maintenance but they can. It’s another weight off your mind if you include it.
- Higher monthly payments – Depending on the loan amount, a car loan can be more expensive on a monthly basis than a lease.
Car leasing is an incredibly popular way of accessing new cars by paying a monthly fee to ‘rent’ the car over a set period of time.
Pros of car leasing:
- Everything is included – Some leases can include servicing and maintenance so all you need to take care of is insurance. Leases are often on new cars, which will also come with warranty.
- Drive a new or higher spec car for less – Leases often bring more luxurious models into your price range. It’s the most affordable way to upgrade in the right circumstances.
- No more selling or trading in – Not everyone likes selling cars or trading in. You don’t have to do that with a lease. Just hand it back at the end of the lease and collect your new car.
- Drive a new car every couple of years – Leasing is a great way to change your car regularly without losing thousands on depreciation.
Cons of car leasing:
- You never own your car – A leased car is not yours. You cannot modify or upgrade it and you will lose money if you damage it.
- Leases are often only for good credit – There are a few leasing companies out there that work with those with bad credit but not as many as bad credit car loan experts.
There is no ‘best’ option overall between buying and leasing. Only the best for your particular situation. Whatever method you choose to get a new car, we can help!