Buying a car: cash, loan or lease?

There are many ways you can buy a car. All are good but for different reasons.

You can buy a car with cash, a loan or go down the car leasing route. But which is right for you?

Paying with cash

This is the cheapest option in the long-term, you may command more bargaining power and you can be comfortable in the fact you own the vehicle.

The major stumbling block is that not everyone will have the full money for a car in cash. As you may well know too, a car is a depreciating asset so it may be wiser to go on a monthly plan (especially if the car you’re buying is really old and more prone to problems).

Bank loan

Often cheaper than dealer finance, you can spread the cost over time into manageable monthly payments coupled with a deposit earned from the trade-in of your used car ideally.

With a poor credit rating you will struggle to go down this route. The better credit you have, the more favourable rate you’ll be able to lend on. Simple as that.

This is a sensible option if you can’t buy the car outright. Do your research on the best bank loans for you though.

Car leasing

Figures from the Finance and Leasing Association show that over 75 per cent of new cars were bought on finance from dealerships in 2014.

Leasing, already widespread in the US, has grown in popularity across the pond too.

According to Rupert Pontin, head of valuations at Glass’ Guide, attitudes to vehicle ownership are changing.

Referring to our consumer tech habits (like our obsession with contract iPhones and iPads and such), he said:

‘Consumers have become accustomed to buying high-priced products and services on a pay-monthly basis.’

‘Owning a car will very likely become a thing of the past for most people.’

The key benefit to leasing a car is that you will have the opportunity to drive a brand new car you might otherwise never be able to. On top of this, you can get some pretty low monthly payments, servicing included and the option to change quite easily without the stresses of buying and selling.

Do bear in mind though that you do not own the car! Take note that there may be a significant deposit and some mileage limits.

You will have a brand-spanking new car! Before reaching for the keys, do the maths.



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