Leasing Vs Buying : The financials

Financially, the difference between buying or leasing a car can be pretty significant but there is no right answer for everyone. It really depends on your own personal financial situation and how you plan to use your car. Here are the top 3 considerations to bear in mind before you decide.


It’s all well and good wanting to do something, but it ultimately comes down to what you can afford. Your monthly cashflow should play a significant role in deciding whether you buy or lease your next car. In most cases, the monthly payment is significantly lower when you lease a car.

When looking at a direct comparison. A new VW Golf, base model would cost £200 a month to lease and around £375 a month to buy on finance (that’s over 3 years) That’s a big difference.

With leasing, you’re paying for the depreciation of the car over the lease period rather than the whole vehicle cost, which is the case when purchasing a car. When cashflow is your biggest consideration, it’s pretty clear which is the most financially viable route.


Initial down-payment

We offer leasing with no payment (if you’re interested, take a look here) but generally speaking, both leasing and purchasing a car requires some kind of initial down-payment. With leasing it is more flexible and often significantly less.

Most car purchase financial products require a 10-20% deposit on the car. It’s pretty fixed and if you want a no deposit option, expect to pay extremely high interest.

Using the VW Golf as the example, the base model costs £17,500, so you would expect to pay a £1700 to £3400 deposit.

With leasing, the initial payment is related to the monthly payment fee. You can expect to pay between 1-9 month’s rental fee upfront. As the initial payment decreases, so the monthly payment increases.

In the VW Golfexample, that’s means you can pay :calculator-nerd

Initial payment £250 (1 mth)+ £263 monthly payment (£6300)

Initial payment £1777 (9mths) + £197 monthly payment ( £6300)
So with leasing a car, your initial payment is flexible the less you pay the more you pay on a monthly payment. However, you’re not punished which ever option you plump for.


Leasing for business use

If you have a business and you purchase a car, regardless of whether it’s with finance or outright, if the car is used for personal use for any reason, the you can’t claim any tax back on it. However, if you lease a car, regardless of whether you use it for personal use or not, then you are entitled to claim up to 85% of the monthly payment for the leased car.

That’s a saving of £2000-4000 a year. Of course, you’ll have the asset of the car if you purchase it, but it’s a depreciating asset.



There is good reason why leasing is becoming increasingly popular, it just makes so much more financial sense. It’s difficult for brits. We like to be king’s of our castle, we like to own things. But in this case, a leasing option is more often than not, the most cost effective way to run a car. When you include the non financial benefits like not having to be concerned with the car breaking down or car tax, there are a lot of reasons to lease your car.

If you’re interested in finding out more about our leasing deals, feel free to check out our latest offers here.

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