Bethany Weir
01 May 2023
Looking for a new car? How exciting! Whether you’re in the market for an upgrade or just looking to try something different, it’s a big decision and one that can feel overwhelming at times. With so many vehicles to choose from and countless options for buying or leasing them, it’s easy to feel a little lost if you’re not familiar with the process. Don’t worry—you’re not alone!
One of the most common questions we get asked as vehicle professionals is this:
“Should I lease a new car or buy a used car?”
It’s a great question, but the answer isn’t as simple as picking one or the other. Each option comes with its own set of advantages and drawbacks.
So, how do you figure out which path is the right one for you? Let’s take a closer look at both new and used cars to break it all down. By the end, you’ll have a much clearer idea of which option fits your needs.
Considerations before you buy
Before you venture out and scour the country looking for the best deal, there are a few things you should consider before you put any pen to paper. These are:
- How often do you tend to want to change your car? Do you like changing your car every two to four years? Or are you happy to buy a car and drive it car until the end of its life span?
- What will you be using your vehicle for? Will you use the vehicle for heavy use, such as off-roading or carrying equipment? Or will you mainly use it for practical reasons like the school run and driving to and from work? Is there likely to be a high risk of damage to the vehicle?
- How are you going to buy it? Are you thinking about PCP or PCH? Thinking of enrolling in an EV Salary Sacrifice Scheme? Maybe you just want to buy the car outright? There are more ways than ever to acquire a new vehicle.
You’ve probably already gone through these, but these questions are invaluable when it comes to weighing up your options.
Benefits of Buying a Used Car
Here are some reasons you may consider buying a used vehicle.
- The car is ready immediately. Whether you’re buying this car locally or online, generally speaking, you can drive the car away that day as soon as you make the decision.
- Imperfections or damage isn’t such a worry. The car may already have some small dents or dings in the vehicle when you buy it as there have been previous owners. Also, as you own the vehicle and not a finance company, you may not worry about small imperfections if a minor accident happens.
- Avoid taking the financial hit of depreciation. On average a new car will depreciate by 15-35% in the first year. That increases to 40-60% by the 3rd year of the car’s lifespan. By buying a used car, you can avoid taking this financial hit.
Disadvantages of Buying a Used Car
Although it has its perks, there are also disadvantages to purchasing a used vehicle.
- Repair costs are your responsibility. Whilst maintenance is important on new and used cars, new cars will come with warranties and do not need an MOT in the first 3 years. Older cars do have higher repair and maintenance costs, especially in premium brands. Without a warranty, the owner will have the responsibility to pay this out-of-pocket. Many people often do not consider this cost when comparing leasing a new vehicle to purchasing an old vehicle.
- Uncertainty about a car’s history and use. As the vehicle has had another or multiple previous owners’ uncertainty around servicing, the history of use or tampering with the recorded mileage (car clocking) can be a risk. The option of approved used found within manufacturer schemes is available, however, this can result in you paying over the odds.
- Cannot customise car from the factory. If buying a new car, you can choose features such as the sound system, interior and exterior colour and heated rear seats. This means you can tailor the car fully to your needs. This obviously cannot be done with a used car.
Benefits of Leasing a New Car
Here are some reasons why leasing a new car may be a good route for you:
- Lower initial expenditure and a set expenditure. The initial expense of a lease vehicle is much lower compared to buying a car. The price is then set for the term you have that vehicle with no change to what it costs you. This can make budgeting easier and remove the uncertainty of outgoings.
- No concern about depreciation or resale. You are not responsible for any depreciation or loss of the market value of the car, and you will not need to be concerned about the onward sale of this vehicle. This is a particular benefit in the current climate with a shift in the market to an electric horizon.
- New Car Every Few Years. If you like to change your car every few years for something different, leasing allows you to do this without worrying about the depreciation of that asset, maintenance or you having to re-sell the vehicle.
- Worry-Free Maintenance. Most new vehicles will have a warranty that lasts three years. Therefore, on a three-year lease, most repairs will be covered. The vehicle also moves on before larger maintenance costs become a concern, and it removes the risk of an unforeseen expense.
Disadvantages of Leasing a New Car
Whilst it can be beneficial it’s good to take these points into account:
- You can’t make changes or modify the car once you have it easily. On a lease, you are the registered keeper of the vehicle and not the owner. Therefore, you will not be able to change anything on the vehicle that will invalidate the warranty or can’t be changed back before the vehicle is due to be returned.
- You may need to pay penalties for extra mileage. The contract will be set on a specific contracted mileage. If you exceed this allowance you will have to pay fees for them. Although many finance companies will offer mileage adjustments, this is down to their discretion.
- You may get charged for wear and tear. You must return the vehicle within the BVRLA Fair Wear and Tear guidelines. If the vehicle condition is outside the guidelines, we may charge you a penalty.
- You will always have payments. When you purchase a vehicle, you will eventually have made all the payments (if you keep the car) and will no longer need to make monthly payments. However, if you constantly lease a vehicle, you will always have payments to make.
What about buying ‘Nearly New’?
You may hear the term ‘Nearly New’ as you venture through your buying journey. These are often cars that someone has owned for 12 months and decided to sell back, or they could have been demonstrator vehicles used by a dealership.
The main advantage of buying nearly new is that the steepest depreciation has already occurred, often within the first year. This means you’re avoiding the biggest drop in value. However, it’s important to note that these vehicles can still be relatively expensive. Financing options may come with higher APRs and fewer discounts compared to new or older used cars.
Do these rules change depending if my car is petrol, diesel, hybrid or electric?
Generally no. Electric vehicles do depreciate slightly faster than their petrol and diesel alternatives (this has more to do with market demand than the vehicles themselves), so leasing a new EV or taking part in an EV Salary Sacrifice Scheme would be a better option here.
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In summary, buying a used car can make sense if you plan to keep and run it until the end of its lifespan. It also makes sense if you will use the vehicle for heavy use where frequent damage is likely.
However, if your goal is ‘hassle-free’ motoring with certainty around costs or you like to change the car every two to four years, then leasing can be a great option for you and save you a little bit of money, too.
Every situation is unique, which is why our Relationship Managers conduct ‘Fact Finds’ with every potential client before they make a purchase. We may sell really nice cars, but what interests us far more, is the people who drive away in them. Get in touch below to find out more!
