Buying, leasing or financing a car?

[natura]

Moving back to the UK from overseas this year, and one of the things I'm trying to get my head around is what to do about a car.

In the past I've always bought little runarounds second-hand and then driven them until they've died – but this time I'm thinking about other options.

This is partly because I'd quite like to (for once in my life!) to have a nice vehicle, and also because I'm likely to be doing a good few long drives to visit my dad on a regular basis – he lives across the country from where I'm going to be based, and it'd be good to have a decent vehicle for that kind of routine.

But I know so little about the benefits and drawbacks of the different options, even after Googling I'm not sure how best to decide.

Leasing seems like a pretty no-worries option, especially since I'm not bothered about 'owning' a car – but is it as good as it looks?

Would love some guidance from people who have taken different approaches - what's been good and what I need to consider!

If you lease, you’ll be penalised for every small ding, scratch etc and you aren’t allowed to buy the car at the end of the lease period, I believe.

I lease, enjoy new cars and not bothered about owning either. We've leased for last 5 year.
As pp, you do have to be careful, but if you are then no worries.

Buy a one year old low mileage car, preferably from a dealer with an extended service and warranty pack. We have always done this and you keep the residual value of the car, so after 8 years or so, go back, but another one, you have your car as a deposit, and you don't get slammed in the first chunk of depreciation.

@Bluevelvetsofa wrong on both counts. The BVLRA fair wear and tear guide means that a certain amount of wear and tear is expected - I sent back a car that was in quite poor condition, with dings and scratches on both bumpers and along one side and all except one was considered within fair wear and tear and I was charged about £60 for it.

Plus of course you can buy the lease car at the end of the contract. My work uses lease cars and it's quite common for the users to buy the cars to keep within the family after 3 years. You just ask for a price and if it's agreeable, you buy it. Why wouldn't you be able to? The lease company needs to sell it and by buying it, you're saving them the hassle and expense of sending it to auction.

OP look at car supermarkets. Prices are fixed and often decent and you can browse online to see what's available before viewing in person.

Wow, this is so helpful already!

@KnittedCardi that feels like it still might be a pretty hefty layout initially – I don't have a huge amount to spend, as I'm saving for a property purchase in my first year back, but I'll look into it. How have you gone about finding these kinds of deals - is it just a question of calling lots of dealerships?

@Bjorkdidit that's reassuring to hear - it's one of the things I was concerned about. I'm guessing from your answers you've done both leasing and buying; which side of the scale do you tend toward now?

I wouldn't lease a car. I just buy a second-hand car which is a few years old and has low mileage. I bought my last car for £8k and it lasted 8 years before I decided to trade it in - and I got £3k in part-exchange when I did.

OP I currently have a Skoda Citigo (so a lot smaller than you're looking at but I find it fine on longer journeys) that I bought from a car supermarket a couple of years ago for £8k.

I've previously driven company lease cars and PCPs and old bangers. Plan for this one is to keep until its 10+ years old by which time I'm hoping there will be good trade in deals on electric cars early next decade when it won't owe me anything but it will take the edge of the price of a new/nearly new electric car.

Lots of smart long-term thinkers here!

I think this may be part of what's affecting my wondering – I'm not entirely certain I'm going to need/want a car over the long-term (still figuring out what life is going to look like once I'm back)

So I'm not thinking in terms of smart financial decisions over 5-10 years, more just 'what's going to get me around for the first 1 or 2?'

And maybe that's part of what's piquing my interest in leasing... but I get that if I decide I DO need a car long-term, it might not be the best move.

We usually do PCP - a new car, with a small deposit and monthly payments for the first 3 or 4 years, then you have three options - either hand it back (we've never done this option), trade it in for another new car using any equity you've paid off as the "deposit", or pay off the remainder of the value and buy it outright.

The advantage is you get a new car with relatively little initial outlay, usually with a long warranty and minimal maintenance cost. We started about 12 years ago when I wrote off a car and didn't have a lump sum lying around to buy anything decent outright, but with three small kids I didn't want to drive around in something old/unreliable. In those days, the finance was available at zero percent, but you won't get that now. I traded to another new car three times, but then bought my present car outright.

There are disadvantages - obviously new cars depreciate quite a lot, and you bear the brunt of that. Sometimes, they are worth less after 3/4 years than the dealer had estimated at the outset, but that never happened to us (always Toyotas which keep their value well).

@Bjorkdidit my daughter in law wanted to keep her car at the end of the agreement and wasn’t allowed to. Everything I’ve read about lease cars says that you return them when the contract is ended.

PCP is different, with a balloon payment if you want to keep the car. A PCP doesn’t have to be on a new car. We got ours when it was six months old, so some of the depreciation has already taken place.

We've been leasing for 4 years, but just bought our own second hand now with low mileage. Its so much nicer to own your own car without mileage limitations etc. It's 8p per mile you have to pay if you go over! It's much better in my opinion to own your own, no monthly payments or worrying about being penalised for any scratches or wear and tear.

PCH (Personal Contract Hire) is leasing whereby you don't get the option to purchase at the end. PCP (Personal Contract Purchase) gives you more choices when the lease is up.

And to point out you can get 0% deals, I did. Just need to look.

I've leased for the last 10 years. They fo sting you if there is damage however.... its reasdurimv i dont have sny ongoing maintainance costs and a new car is reliable