Buying vs. Leasing
There are far more people these days turning to renting or leasing, as opposed to simply buying products outright. Perhaps it’s down to the fact that people just can’t get the money together in their youth to buy properties anymore, so for some freedom away from their parents, they rent instead and take the monthly hit. However, I’ve noticed this pattern a lot more recently in things like leasing cars or even mobile phones. As a result, I’ve found myself looking at what the various benefits are to buying vs leasing – here are just a few of my key thoughts…
What’s the product or service?
Unsurprisingly, the first thing to consider is the product itself. There’s obviously a huge difference between renting a home and leasing a car, but they equally have huge benefits if you choose the right dealership. I mentioned above about the many people in their 20s these days who are finding it impossible to save for a deposit, but still crave that independence and freedom that comes with having their own place. Many people now are choosing to stay in rented accommodation permanently too, as they like the ability to simply up-and-leave at the end of their tenancy if some nightmare neighbours move in.
Similarly, when it comes cars, once you own it, it instantly loses a huge percentage of its value, but leasing a car instead means that you can negotiate lower monthly instalments. You can also trade it in for a different model at the end of the lease if you don’t like it, while leasing short-term gives you the ability to try out different manufacturers and models until you find one you do want to buy.
What’s your monthly expenditure?
Whether you buy or rent a product also depends on your monthly budget. In terms of property, monthly mortgage payments are often cheaper than rent, and of course you own the home after buying. However, most people cannot afford to pay rent as well as save for a house deposit, so if you cannot live with a relative, your monthly budget won’t allow you to buy a home. Many people these days also have so many monthly direct debits for things like mobile phones, software and other bills, that they don’t even consider the idea of not owning a product as a drawback.
Similarly, aside from the initial up-front cost, buying a car leads to monthly insurance payments, road tax and so on, and you might think that a leased car would be more expensive. However, all is not lost if you know where to look; I recently took a look at www.allcarleasing.co.uk for the deals they could give me on a long-leased family car, and you’d be surprised at the many ‘Hot Deals’, ‘Manager’s Specials’ and the sheer number of vehicles that they have to choose from. If you look in the right place, you can definitely find a product to suit every budget.
The idea of leasing and not being tied to one product is definitely looking more and more appealing to me these days. What do you think about the modern-day buying vs leasing debate?