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Pros and Cons of Car Leasing

By: Kevin Watson MSc - Updated: 24 Jul 2016 | comments*Discuss
Leasing Car Advantages Terms Period

When it comes to buying a car, there are various finance options. One of these is to pay cash. Such a decision is personal but may not always be wise. The value of a car depreciates rapidly. And if a car has a number of faults, a driver may regret using his or her savings on what proves to be a liability.

Other options are hire purchase, a personal loan, and a personal contract plan. Each has its advantages and disadvantages. And the use of one of these options, as with cash, depends on individual circumstances.

But anyone who’s considering how to buy a car should also look at leasing. This method of finance has a long association with business vehicles. It’s now possible, however, to lease a car for private use.


When a driver leases a car for personal use, he or she enters a contract with a leasing company. This company works in association with a car showroom.

What any potential lessee needs to know is the period of the lease, the deposit, the monthly cost, and the terms and conditions.

The period of a car lease is usually two to four years. The leasing company may not offer any flexibility with this period. It’s therefore wise to establish exactly how long the lease extends for a particular car.

Some companies, though, will give quotes for two, three and four-year leases. Often, but not always, a three-year lease is cheaper than a two-year, and a four-year is cheaper than a three-year.

The deposit is often the equivalent of three months’ payment. Always confirm the exact amount.

The monthly cost varies according to the make and model of a car. If a monthly payment seems high, ask for a quote for another model. As a rough guide, the more expensive the cash price of a car, the greater the monthly payment.

Such figure work is fairly straightforward. But monthly costs are just half the issue. A lessee must also pay careful attention to the terms and conditions.

In particular, a lessee should establish the annual mileage limit. This may be 10,000 miles, although the limit does vary. A lessee who exceeds the limit pays a penalty based on each extra mile.

It’s also wise to check if the leasing company is prepared to sell the car at the end of the leasing period. A lessee may not want the car, preferring to start a new lease. On the other hand, a good car may be worth keeping.


The way that car leasing works has a number of pros and cons for drivers.

Perhaps the most significant of the advantages are the predictable monthly costs and low deposit. Anyone who compares such costs to hire purchase and personal contract plans may find car leasing is good value.

The other benefit is being able to drive a new car - and then change it at the end of the leasing period. This way, a driver can have a vehicle covered by a warranty.

The final point in favour of leasing is that the lessee has no lump sum to find at the end of the fixed period. A lessee simply hands back the vehicle.


Car leasing doesn’t appeal to some drivers because the cars are never their own. The vehicles belong to the leasing company. The only way to own the car is to buy it at the end of the leasing period. But this isn’t always possible.

Another disadvantage is that a lessee may do more miles than the leasing contract allows. If so, as explained above, there’s an extra charge.

Leasing a car can also be expensive in the long-term compared to buying a car outright. But some drivers weigh this against the advantage of having a brand new car every two to four years.

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My wife and I are about to move this summer. Because we are moving to a really cold place, we think that we may need a car with all wheel drive. So we are considering whether to buy, finance, or lease a car. Thanks for the info!
Nate - 16-Feb-16 @ 5:30 PM
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