Should I Lease or Finance My New Car?

Choosing whether to lease or finance your car can be a confusing decision. Both offerings allow you to pay for a car in smaller monthly payments and represent a good option for those drivers who don’t want to fork out one large lump sum. Here at Eden, we offer a variety of finance packages and both leasing and financing are available on many of our excellent vehicles.

But what is the difference between lease and finance and which could work for you? We’ll be finding out in this article.

What is leasing?

Leasing is a popular option when it comes to buying a car. Think of it a little like renting a car; you’ll take delivery of a new vehicle and pay for it in monthly instalments for a set period, usually between two and three years. Then, at the end of the agreement, you hand the car back to the provider and you’re free to choose a new vehicle and a new leasing package. There’s no option to buy the car in full at the end of the agreement - you’ll need to give the car back once the period is up. Check out our latest car leasing special offers.

What is financing?

Financing is another attractive way of owning a new car. You’ll pay a deposit at the start of the agreement before making monthly payments over a term of a few years. Then, at the end of the term, you can choose to pay a final ‘balloon’ payment and keep the car for good, or hand it back to the supplier and start a new finance agreement.

There are a few different types of financing, too, with the two most popular being Personal Contract Purchase (PCP) and Hire Purchase (HP).

What do those two types of financing bring?

PCP and HP do bring slightly different features and provide good options for drivers. PCP traditionally brings lower monthly payments than HP, but then there’s a larger payment at the end of the agreement should you want to own the car outright. At the end of the agreement, you don’t need to only consider payment of that balloon fee, as you could always walk away from the deal entirely. There’s also the option to use some of the car’s value as a deposit for another finance agreement.

HP, in contrast, usually brings larger monthly payments - but this is because you’re paying off the total amount of a vehicle through those regular instalments. Once you’ve made all of those payments, the car is yours and you’re free to keep it, or you can sell it for the total amount it’s worth. There’s no final balloon payment to make, either.

What are the benefits of leasing?

The benefits of leasing come in its simplicity. If you’re not too bothered about owning a car outright, then leasing provides you with a new set of wheels and very few strings attached. You simply make the monthly payments and stick to an agreed mileage limit over your agreement term, before handing the car back. You’re then free to start again if you’d like.

Leasing allows you to get a new car regularly. Plus, there’s no final balloon payment to think about at the end of the agreement.

What are the benefits of financing?

Financing is great for those drivers who are considering the idea of owning a car outright. As we’ve looked at, there are plenty of further options within the world of financing, so there should be a package for most drivers to choose from.

Financing does usually bring a decent compromise in terms of monthly payments, too, and though you’ll need to think about that final optional payment (but not in the instance of Hire Purchase) it’s a setup which works well for thousands of drivers each year.

Which one is best for me?

Which package works for you depends on your situation and whether or not you want to own your car at the end of the agreement. If you’re happy with simply handing a car back, then leasing is a great choice - and it brings lower monthly payments, too.

However, if you’d like to own your car outright then financing is a great way of paying for a vehicle. Remember, here at Eden we offer all types of payment solutions so if you’re still unclear on which is right for you, get in touch with a member of the team today and we’ll be happy to help.