An Alternative Route

 

Leasing is fast becoming a popular way of getting a new car, as it offers an alternative way of obtaining the most practical vehicle for your requirements. 

 

There are many visible advantages to leasing, for starters it is a shorter-term method in comparison to purchasing a vehicle outright, as leasing contracts typically last between 2-3 years. As a result every few years, after your contract ends, you can essentially ‘upgrade’ your vehicle and get a more modern one in its place.

If you are interested in leasing and are keen to know more, we have listed some benefits of leasing that you may not necessarily know about: 

Road Fund Licence is included in the lease cost, so this is a payment that you will not have to factor in when leasing a vehicle. And this payment can be a substantial one, although it does depends on your vehicles CO2 emissions, it can be up to £515.

 

Outright purchasing can cause a major problem with your cash flow. Purchasing one, or more, vehicles has weighty costs attached to it, and a resulting lack of cash flow can affect other potential investments. With leasing your initial expense will be significantly less than when purchasing, as the initial payment will only be around 3-6 times your monthly rental. 

 

Maintenance packages are usually offered alongside a leasing contract, and they can be especially beneficial for a business that has a fleet of vehicles, or for individuals who have a high mileage. There are many benefits with a maintenance package if you choose to opt for one along with your leasing contract. 

If you purchase your vehicle outright then the MOT, servicing, tyres and unexpected repair costs will be down to yourself to cover. However, with a maintenance package these services are usually covered with a monthly charge simply added to your leasing payment. 

 

Before continuing lets first demystify some key terms, ‘depreciation’ is the devaluation of a vehicle overtime, whereas ‘residual value’ is the remaining value on your vehicle after the ‘depreciation’. 

 

Only in really extreme cases does a vehicle increase in value, depreciation more often than not causes the biggest loss for people who opt for outright purchasing. With leasing you avoid this burden of depreciation. According to the AA, www.theaa.com/car-buying/depreciation, the average car loses most of its value within the first year – up to 40% – with this increasing to 60% by the third year if you average around 10,000 miles a year. 

 

Persuasively put by J. Paul Getty, billionaire oil tycoon, “If it appreciates, buy it. If it depreciates, lease it.”

 

For an alternative route perhaps you should steer right into leasing?