Buying a new car is an exciting prospect, filled with the allure of a shiny new vehicle and cutting-edge technology. However, the initial enthusiasm can quickly fade when you realize how quickly a car’s value declines—a phenomenon known as depreciation. Fortunately, there’s a smart alternative: car leasing. While it’s gained significant popularity, leasing still faces some misconceptions, often dismissed as simply “throwing money away” since you don’t own the car. The reality, however, paints a different picture.
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The Cost of Depreciation
Just how much can you save by choosing to lease instead of buy? Let’s look at a representative example: the Nissan Qashqai, a consistently popular car in the UK. A new entry-level 1.3 MHEV DiG-T Acenta Premium model costs £30,615. However, after just three years, its value can drop by more than 50%, resulting in a loss of £15,740 for the buyer.
Leasing Offers a Significant Savings
The same Qashqai model can be leased for around £201.80 per month, with an initial payment of £2,421. Over three years, the total cost comes out to £9,686—a savings of £6,054 compared to buying. To put it in perspective, leasing can save you over £2,000 annually. And this isn’t an isolated case. For cars like the GWM Ora 03, the potential savings are even more substantial, exceeding £12,000.
Additional Perks of Leasing
The financial benefits are just the beginning. Leasing also offers several other advantages:
- No Road Tax: Leasing agreements typically include road tax, eliminating another recurring expense.
- Maintenance Included: For a small monthly increase, you can have the car fully maintained, including new tires and servicing.
- Improved Cash Flow: Paying monthly allows you to keep more money in your bank account, earning interest.
Mileage Considerations
The primary downside of leasing is mileage restrictions. The examples provided are based on a yearly allowance of 5,000 miles. Exceeding this limit can incur extra charges. While this might deter high-mileage drivers, the cost isn’t always as high as perceived.
Increasing the Qashqai’s yearly mileage allowance to 20,000 miles raises the monthly payment to £257.34 and the initial payment to £3,088. However, the total cost over three years remains at £12,352—still representing a savings of £3,388 compared to buying new.
A Proven Strategy
The author’s personal experience highlights the wisdom of leasing. Having leased cars for nearly a decade and saved a considerable amount of money, they’ve committed to never buying a new car again. Leasing offers a financially sound and convenient alternative to traditional car ownership, making it a compelling choice for many drivers.
Leasing offers a financially sound and convenient alternative to traditional car ownership.
In conclusion, leasing can be a smart way to avoid depreciation costs, manage monthly expenses, and enjoy newer cars regularly. By carefully considering mileage needs and comparing costs, drivers can unlock significant savings and enjoy a more flexible approach to car ownership.
