Finding value for money is arguably harder than it has been in a generation due to a number of factors that it’s natural to feel are beyond our control. Interest rates and the cost of borrowing, economic uncertainty, and conflicts in various corners of the world that impact the global economy are all making things harder than many of us would like. The problem is that if we dwell for too long, we can lose sight of the smart financial moves that are still within our control.
With this in mind, we’re going to turn our attention to the increasingly popular world of car leasing so that you can see why it may just be the smartest move you make this year.
What is car leasing?
Traditionally, you would have a choice of buying a car outright for cash at the point you drove it off the forecourt, or you could take out car finance and return the car at the end of the contract. Car leasing presents a new option that has been widely established for years in countries around the world. The idea is that the leasing company maintains ownership of the car at all times, and that you take a lease agreement with them. This is essentially a long-term rental agreement that extends for 2-3 years, allowing you to drive the latest models and then hand the car back with a clean slate at the end.
Car leasing offers lower monthly payments
At a time when every household in the UK is trying to reduce its monthly outgoings, car leasing becomes an increasingly attractive proposition. Because you are only paying for the depreciation of the car—not the full sticker price you will see advertised—the monthly payments you make during the course of the lease term will drop. Ideal when you want to free up some of your regular income to put towards other pressing issues.
Leasing a car will drop the upfront costs
Many leasing offers will come with little or no down payment, allowing you to keep cash in reserve for investments and a rainy day fund. At a time when the economy seems to be serving up curveballs at a pace that is unlike anything in recent years, this is something that is sure to be welcome news for many motorists in the UK.
A leased car won’t expose you to the risk of depreciation
Owning a car outright may sound like a good idea because your monthly repayments will eventually stop, but is a car actually an asset of any real long-term value? Whereas land and property generally increase in value when you wait long enough, cars move very quickly in the opposite direction due to their finite lifetime. In fact, it’s common for the value of a car to halve in as little as 2-3 years.
The problem here is that you are then left holding a low-value asset that you need to sell so that you can fund an upgrade. Leasing sidesteps this stressful issue by allowing you to hand the car back at the end of the agreement and then start over.
Leased cars are virtually brand-new and much cheaper to maintain
It’s very common for leased cars to have little or no mileage, so that routine maintenance, servicing, and repair work becomes much more predictable than with a heavily used vehicle. Not only that, but there are many deals to be had where the warranty covers the full duration of the agreement, allowing drivers to sleep with the peace of mind that only comes from knowing that they have more protection from sudden demands on their bank balance.
There are tax benefits to be had when leasing a car for business
If you use your car for business purposes, you may find that you can deduct the VAT and other associated costs from your monthly payments. Ideal when you want to make sure that your business can remain lean and agile regardless of what happens in the wider economy. By looking at the deals on offer from the likes of Vantage leasing and then seeking clarification from a trained accountant, you will be able to make the smart move that gives you better value for money from day one.
Final thoughts on car leasing
Not only does leasing a car give you a newer, more reliable, and more fuel-efficient car for less than traditional car financing or buying outright, but it also gives you a safer car. Because car leasing companies connect you with the very latest models on the market, you can get behind the wheel knowing that you will have the benefits of the latest safety technology and driver assistance systems.
Taking your time to look at the car leasing options that are out there, and then considering potential tax breaks if you are leasing for your business, will help you make your smartest financial move of the year.
