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The first thing to do when thinking of buying or leasing a car would be to determine your budget. AA suggests that most cars loose almost 40% of their value in its first year, they also go on to emphasize the other costs involved in purchasing a car like the insurance, road tax, MOT and so much more. In 2013 a writer for the telegraph highlights the growing popularity of personal car leasing, it then goes on to state that in America every 1 in 4 cars seen on the road are leased. In the UK we are slowly catching up with the US in terms of the growing popularity of car leasing. In order to allow customers to make an informed decision we dove deep into a variety of criteria considered before purchasing a new vehicle, criteria like; your monthly cash flow, Savings for down payment, potential usage, business or personal use and more. You also need to consider the indirect costs related to buying a car for example regular serving, replacement parts, and more.


1.   You can drive a new car every two to three years: Some people tend to get attached to their vehicle and for those people you might be better off buying. However there are those that recognise their vehicle for what it is a transportation apparatus. Leasing allows the customer to drive a new car which they can then update depending on the duration of the lease. When considering whether to buy a car or lease it you might want to consider the fact that there is no reason to own anything that you know will decrease in value.


2.   Depreciation – Remember those cartoons that show someone buying a car and as soon as he drives it off the lot the wheels fall out and the car fall apart? Well in reality it doesn’t quite work like that however the concept still remains the same. Once you buy a car and drive it off the lot it immediately starts to depreciate in value and the longer you have it the less value it has when it’s time to sell. With lease cars you do not have to worry about the depreciation as you are going to return the car to the dealer after your lease is up.


3.   Deals – When it comes to leasing a car there are endless amounts of deals available to customers from a variety of dealers across the country. While it is always good to have an idea of which make and model car you’d be interested in, knowing what types of car finances are available to you are more important as signing the wrong type of lease agreement can significantly impact the cost of driving your new car.


4.    Repair Costs – once you have leased a car the dealers would highlight the length of your factory warranty which in most cases lasts for the duration of your lease. This means that you can now save the money you would have been spending on repairs if you owned the car out right. You should also note that the factory warranty covers most repairs however you might encounter repairs that your warranty doesn’t cover. We should also note that road tax is usually included in the lease.


5.  Down payment – Another reason why leasing is better than buying is the down payment. With leasing a car the amount you are required to pay is considerably less than if you’d bought the car outright. With regards to leasing the more you pay as your down payment the less you have to pay in monthly fees.


6.    Hassle free Trade-Ins – One of the hardest things to do is to sell a car, there are a whole new set of things to do and to take into consideration before you can sell it. However with a lease car once your lease agreement comes to an end all you have to do is return the keys to the dealer or you can upgrade for a newer car.


7.  Monthly Payments –Your monthly payment depends on how much you pay as down payment when you first lease the car. The more you pay as a down payment the less you have to pay monthly. This beats spending your allocated car budget all at once and leaves your ready cash tied up in a car that can only depreciate. These monthly payments in most cases will be less expensive than monthly payments on a car loan.


8.   Tax Deductions – If you own a business you can claim most some of the money back in form of a tax deduction, the Money Saving Experts suggest that sometimes drivers can claim back up to 50% of their VAT. This means that at the end of the tax year if you list the car as a business expense you are entitled to a certain amount back.


9.   GAP (Guaranteed Asset Protection) – There are a lot of reservations related to insurance but in this situation it is greatly advised. In a situation where you have to write off your leased vehicle or it has been stolen the insurance payout might not be enough to pay the dealer or finance company that you owe. There is where GAP comes in; they’ll cover the difference between what you have left to pay and the insurance payout.


10. It’s just easier – When all has been said and done one undisputable fact is that it is far easier and quicker to lease a car than to buy it. Dealers and manufactures realise that to increase customer loyalty and repeat purchases they would be better off making the process as easy as possible for their consumers.




Sources


http://www.telegraph.co.uk/finance/personalfinance/money-saving-tips/10356610/Your-next-new-car-buy-it-or-lease-it.html


http://www.gocompare.com/car-insurance/is-it-cheaper-to-lease-or-buy-a-car/


http://www.arnoldclark.com/newsroom/676-car-leasing-vs-buying-which-is-better


http://www.edmunds.com/car-buying/should-you-lease-or-buy-your-car.html


http://www.theaa.com/motoring_advice/car-buyers-guide/cbg_usedtips.html


http://www.moneysavingexpert.com/car-finance/car-leasing

 

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