Car leasing – an increasingly popular alternative to ownership
The proportion of people choosing to lease a car rather than buy is increasing rapidly. One car leasing company claims that the ratio of its business four years ago, which was 70% business lease versus 30% private lease, has now reversed.
It’s easy to see the attraction. No more worries about depreciation, which bites hard the moment you take delivery of your new car purchase. This can knock a staggering 70% off what you paid in just 3 years. No hassle either when it comes time to resell.
So how does leasing stand up to buying financially?
A recent Times online evaluation suggested it was pretty even on a £17K new car over three years. Although the outright purchase example saved £300, the monthly payments were over £145 higher. On shorter deals the comparison is likely to swing in favour of leasing. In addition, people who use their car purely for business and are Vat-registered can reclaim the tax on the agreement. That sometimes tips the balance in favour of leasing.
If you’re tempted to consider car leasing be sure to check out terms such as the annual mileage agreement, what your leasing company means by ‘wear and tear’, what happens on early termination, and make sure you choose a lease that does not exceed the warranty period of the car.
If you’re satisfied on these points then leasing may be the way forward for you.
December 30, 2008 at 7:36 pm | Car Leasing Advice | No comment
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