Buying a new Car? Cash or Finance?
You’ve decided it’s time to upgrade your vehicle. The make and model are details yet to be decided, but the destination is already clear: to find yourself a brand new car on the terms that work best for you.
Between the decision to upgrade and the final destination is the route you’ll take to get there and, as with most journeys, there are several options to consider.
As a driver in the sat-nav era, you’ll already be used to weighing up the pros and cons of the available routes before making your final choice: easy motorway driving vs. demanding but scenic country roads; inner-city jam vs. the rush-hour ring road; and the old faithful vs. the brand new bypass. Each has its charms, and each its repellents.
As a modern driver, you are laden with options of all kinds, but amongst the most important decisions you’ll make on this journey is the choice between the following three primary routes to getting your new car.
Route option 1: Purchase
Buying is the traditional route that most drivers are familiar with. Car ownership is an idea that many of us have grown up to aspire to throughout our lives. Much like owning one’s own home, buying brings a real sense of responsibility and dedication to the things we choose as ours.
Unless we have the money saved to buy a car outright, most people require some sort of financial aid. Taking out loans to cover the cost of a new car is common, but its downside is the ongoing commitment to paying off the debt.
Owning a car – much like owning a house – means that you can do pretty much whatever you like with it. But with the power to do as you please comes the responsibility to do what you must; you will be fully responsible for making sure the car is roadworthy with regular servicing and maintenance, and as the car ages it will be yours to take care of. When the time comes to move on, you will be left responsible for the sale of the used car.
Route option 2: Personal car leasing
Leasing is a relative newcomer in the auto sphere, and its popularity is growing with every year. Leasing can be compared to renting a home; you choose the place you want to live (the car you want to drive), and you sign a contract for the period you want to live in (drive) it and when you’re done with the property (car) you hand the keys back to owner and walk away.
Personal car leasing is arranged between you and the leasing company. You choose the make and model you want to drive, and then pick a contract to match. You’ll be able to choose from more desirable models than you might otherwise be able to afford, and the contract can last for months or years, with its cost tailored to your budget. You pay nothing upfront, and a fixed rate each month for the length of the contract.
Whilst leasing doesn’t offer the same sense of responsibility as ownership, it does offer much greater freedom. As the leasing company remains the legal owner of the car, it is their job to take care of the servicing and maintenance and their job to sell it once your leasing contract is over. At the end, there is no option to buy the car but you are free to walk away or move on to another vehicle.
Route option 3: Hire purchase and PCP
Hire purchase (HP) is the process of paying off the value of your car in monthly instalments. When the payments have all been made, you become the legal owner of the car. The benefits of this are that you will be able to afford a better car than you otherwise would have been able to, and ultimately you will own the vehicle. On the downside, monthly instalments can be high and the commitment to the contract means that you must settle the finance deal before the car is yours to do what you want with.
PCP is slightly different from Hire Purchase, because here you would pay off only the estimated depreciation of the car. That means lower monthly instalments than with an HP arrangement. However, in order to reach the goal of becoming the owner of the car you have been driving and financing, you then must make a final balloon payment. This can be costly.
Our choice
As with choosing any route from A to B, the decision can be influenced by all kinds of factors. The old-fashioned buying method works for some, and the payment options with PCP and Hire Purchase work well for others.
Personal car leasing provides something for everyone. The option is quickly growing in popularity, and we can see why. Leasing offers the joy of driving a brand new car that you otherwise might not have been able to afford, as well as the freedom to step away after a commitment only as long as you choose. For the modern driver who simply wants to enjoy their driving experience, we consider hassle-free personal car leasing the best route all-round.
Thanks for providing the advice in this article go to Vantage Leasing who are a car leasing company based in Cheshire with over 9 years experience in the automotive industry, authorised and regulated by the Financial Conduct Authority & full members of the British Vehicle Rental and Leasing Association
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