Whether you buy or lease your next car is purely down to you. Factors that you should consider are your budget, your mileage and your personal preference on owning a car.

If you choose to buy a car, you’ll have full ownership of the vehicle, with fewer limits when you configure the trim and style of your car. Remember you can buy a car on finance and pay monthly, rather than buying in cash.

That said, you’ll have to factor the depreciation of the car when you sell it. Depreciation is the rate at which your car’s value drops over time. This isn’t an issue if you lease. Leasing is a good choice for those who want to drive a brand-new car every few years without owning one. It can work out cheaper per month than buying on finance or in cash.

Leasing is a popular way to get a new car, but it isn’t right for everyone. Here are some advantages and disadvantages to keep in mind when making your decision.

Pros:

• The initial payment is usually low
• You’ll typically have lower monthly payments
• the vehicle is normally covered by a warranty
• You don’t have to worry about the car’s depreciation

Cons:

• You’ll never own the car
• You’ll face penalties for excess mileage
• Most contracts include fees for terminating early
• You may have to pay more for specific colours or trim levels

The higher your credit score, the better a lease deal you are likely to be offered.

Remember that how your credit score is measured can vary depending on the credit report you use. Similarly, lenders will have different criteria so shop around and get different quotes.

There are sometimes extra fees and costs involved in leasing a car. Your agreement may include:

• An initial payment usually equivalent to 3 6 or 9-months’ payments
• Administration fees, which can be on average around £300
• Late payment fees
• Excess mileage fees (sometimes per mile) · Maintenance fees on anything over fair wear and tear, to be paid at the end of the lease

Also remember that prices listed don’t always include VAT, which you’ll have to pay unless you are a VAT-registered business.

If you want to make monthly payments but have the option to buy the car at the end, take a look at personal contract purchase (PCP) deals. We have a range of car finance deals but it’s important to find the best option for you.

If this isn’t an option, you should be able to arrange a test drive through the manufacturer’s website or a local dealership. As car lease deals can sell out quickly, we advise you create a shortlist of cars to test drive in advance, so you can make an informed decision while the best deal is in front of you.

When you take out an insurance policy, you’ll need to let the insurance provider know that it’s for a lease car. You’ll also have to share the terms of the lease, alongside the name of the car’s ‘registered owner’ (normally the lease company) and the names of any additional drivers.

You can learn more about insuring a lease car here.

Learn more about returning a car lease here.