There are a number of different ways to buy a car. The right method for you will depend on several factors and on your personal circumstances. Let us take you through the various options of buying or leasing a car and the pros and cons of each.
Buying a car outright is a popular way to buy a car, particularly if you have enough savings to not require a loan or finance (which incur interest). A big positive of this method is the fact that you fully own the asset which can later be sold, or part exchanged. If you don’t have enough savings to fully cover the cost of buying a car outright, you still may be able borrow money in the form of a personal loan or other finance.
Leasing a car is essentially renting one over a long period (typically anywhere between 12 to 60 months). You pay a fixed monthly amount for use of the car, with service and maintenance typically included. There are limitations of car leasing, however, including having a mileage limit which can’t be exceeded without additional charges. At the end of the agreement you return the leased car you are renting – it never belongs to you directly. Most leasing deals require a deposit of some kind too.
Financing a car is when your car is paid for by a loan secured against the car. Finance agreements require fixed monthly loan repayments over an agreed time period (typically between 12 and 60 months).
There are a few different ways to finance a car. For example, a Conditional Sale agreement means the car will be registered in your name and can be used for the term of the agreement; however, you will not own the car until all repayments are made. Another way to finance your car is through Hire Purchase (HP), which allows you to hire the car from a lender until it is paid for in full.
The main difference between car leasing and car finance is the ownership, as most car finance agreements include a final payment so you can become the owner of the car. Some finance deals require a deposit, which can be cash or from a part exchange of another vehicle you own. For more information, visit our car finance page.
Once you’ve decided which car buying option is right for you, read our guide on what to look for when buying a car. If you have bad credit and are interested in car finance, apply online with Moneybarn today to find out how we can help.
The choice of buying, leasing or financing depends on several factors and on your personal circumstances. Buying a car is no simple decision. You have to consider what you can afford, what type of car you want, and other factors important to you. In fact, it’s probably the second-most expensive thing you’ll buy – after your home. So, it’s important to make sure you choose the best way to buy a car for you.
Not necessarily, no. Leasing a car can be a smart, flexible and suitable car buying solution, particularly if you desire to drive a brand-new car and want to change it every 2 or 3 years. You simply need to be aware of restrictions like mileage limits and wear and tear damage, as these can incur additional costs.
Car finance can be a convenient and flexible car buying solution for many people, and unlike car leasing, gives the buyer the option to buy the car at the end of the agreement. It can be considered a good balance between buying a car outright and leasing a car, as the deals and agreements can be flexible to fit your needs. You can apply for car finance in just 5 minutes with Moneybarn.
Representative example: £10,030 repayable over 57 months. 56 monthly payments of £322.77. Representative 31.9% APR. Total amount payable is £18,075.12. Subject to affordability and you could risk losing your vehicle if you do not keep up payments.