You may already know that car leasing will be a cheaper deal compared to purchasing a vehicle, and this is an obvious benefit. Compared to buying, leasing can be a better arrangement because you don’t have to worry about depreciation. Purchasing a car isn’t a recommended investment because it depreciates. But with leasing, you don’t have to worry about such a factor because it’s not yours from the get-go. You are only using it for a certain duration, and you will give it back to the leasing company in the end. But is it the same with other options? What makes vehicle leasing different – and beneficial? Here’s a detailed comparison between vehicle leasing and other deals: which is best for you?
If you have the money, you can purchase a vehicle and pay for it outright. For those with enough savings, this can arguably be the best option because you have no requirements for an initial deposit (you are paying in full, after all), and you will own the car as soon as you pay for it.
With a credit card purchase, the length of repayment can stretch up to 20 months, and although there isn’t any deposit, you will still have to worry about paying off your debt.
A personal loan
Lots of people take out personal loans to purchase a vehicle, and agreements can last from one year to seven years. You don’t have to settle an initial deposit, but you will have to make sure that you can pay off your debt.
Personal contract purchase
Another option would be a personal contract purchase, and for this, typical agreements can last from one to five years. You will have to shell out a deposit initially, and the finance provider will own the vehicle unless you choose to pay a balloon payment at the end of the agreement. With this, you also have to deal with restrictions on mileage.
Hire purchase is another option, and agreements can vary in length from one to five years. There is a deposit to contend with as well, and the finance provider will own the vehicle until you make your final repayment.
Personal contract hire or vehicle leasing
Personal contract hire or vehicle leasing is often the cheapest option among all the options, and agreements can stretch from one to four years. This entails a deposit, although it is usually lower than other deposits you need to make with other deals, as confirmed by contract hire specialists like Diamond Contract Hire. Also, there is a mileage restriction, and the lease provider will be the owner of the vehicle at all times.
Which is best?
There is no right or wrong answer to this, because, at the end of the day, it really depends on your requirements and circumstances. Cash will always be king, which means paying with cash for a vehicle is the cheapest in the long run, but not many people will have the cash. Personal loans are fine if you really want to own the vehicle, but you need to borrow money, and PCP deals can be ideal – but it comes with a high final payment. Contract hire deals are good if you want to have a brand new vehicle or a higher-end model but can’t afford to buy, and if you want to change your vehicle every few years.