Car buying options: Should I buy, lease or finance?

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 and the pros and cons of each.

Car buying options

Buying a car

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. Some people also like the feeling of fully owning and investing in an 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

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 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

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), and in some cases a final payment before you 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.

Car buying options – pros and cons

Pros and cons of buying a car outright


  • You fully own the car as an asset, which can be sold, or part exchanged in future.
  • You are only investing in the asset itself, rather than paying addition finance or interest costs.


  • The up-front costs will be higher, as you will need to pay the full car value to purchase the car. Read our affordability guide for tips on how to calculate the purchase and running costs of a car.
  • Unless you have significant disposable income, buying a new car outright is not realistic for many consumers. If you want to buy a brand-new car, leasing or finance might be better solutions. If you want to buy a brand-new car outright, the costs involved aren’t realistic for most consumers. If you desire a new car, leasing or finance might be better solutions.
Pros and cons of leasing a car


  • Leasing deals usually include servicing and maintenance costs.
  • You don’t have to worry about a car depreciating in value.


  • There are usually additional charges if you exceed the mileage limit or want to end the agreement early.
  • You never own the car.
Pros and cons of financing a car


  • Usually quick and easy to arrange.
  • Flexible terms allow you to pick the right car and deal for your needs.


  • You don’t own the car until the final payment is made.
  • You are committed to making monthly payments over a defined time period, meaning less flexibility if your circumstances change.

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.

Car buying FAQs

Should I buy, lease or finance a car?

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.

Is car leasing a waste of money?

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.

Is car finance worth it?

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.